The Government held off on imposing a higher level of tax on vacant homes because they did not want to “excessively penalise” a small number of property owners, records show.
Some 3,500 properties are liable for the vacant homes tax announced in the 2023 Budget.
An estimated €2 million is due from the tax this year, according to briefing documents provided to the new Minister for Finance Jack Chambers last month – but Government officials indicated the point of the tariff was not to raise cash, but to encourage owners to get the properties back into the housing market.
The briefing material contained a specific question asking whether the rate of the vacant homes tax had been set at a level that was “too low”.
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Department of Finance officials replied that the aim of the vacant homes tax was “to increase the supply of properties in the market by encouraging behavioural change”.
“While a higher rate would mean a greater yield, the policy intent of a vacant homes tax is not to raise revenue.”
In the Budget last year, the Government increased the rate of the vacant homes tax from three times to five times the property’s existing base local property tax charge.
In Dublin city, the local property tax on a house valued at around €500,000 would be about €420.
The Department of Finance told the Minister: “In setting the appropriate rate for the tax, the Government believes that care must be taken to get the balance right between achieving the objective of encouraging the use of available housing, without excessively penalising a limited group of property owners.”
It said that the key objective was to increase the supply of homes for rent or purchase by encouraging the owners of vacant habitable residential properties to bring those properties back into use.
“A charge to vacant homes tax will apply to properties which are occupied for less than 30 days in a 12-month period.”
“As of April 2024, 5,900 properties have been declared as vacant. Of these 3,500 are liable for the vacant homes tax with the remaining 2,400 being exempt from the tax.” Department of Finance officials told the Minister.
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