The Irish Government today published its Budget 2026, which includes a number of taxation measures designed to stimulate housing supply.

Change in VAT rate applicable to the sale of new residential apartments

There is a positive change in relation to the VAT costs arising on the sale of new residential apartments. It has been announced that from 8 October 2025, VAT is chargeable at 9% in substitute for 13.5% in relation to the sale of certain immovable goods as residential apartments. The reduction is to remain in place up to 31 December 2030.

The financial resolution introducing this change specifies that the rate will apply to the supply of a new apartment used or to be used for residential purposes. The reduction should apply to the VAT chargeable on sale of a new apartment in a multi-storey residential property that comprises, or will comprise, not less than 3 apartments with grouped or common access.

New corporation tax exemption for Cost Rental income

Another positive change is the introduction of an exemption from Irish corporation tax for rental profits from Cost Rental homes.

The exemption will apply in respect of properties designated as Cost Rental by the Minister for Housing, Local Government and Heritage from 8 October 2025.

The exemption is intended to accelerate the delivery of affordable homes to the market and to incentivise investment in this space.   

Enhanced corporation tax deduction for apartment construction costs

An enhanced corporation tax deduction was announced for costs incurred on the construction of apartment developments and the conversion of non-residential properties into apartments.

The Budget materials note that the measure will allow an enhanced corporation tax deduction of 125% of the qualifying costs, up to a maximum additional deduction of €50,000 per apartment unit. The proposed deduction is to be subject to a number of conditions and will be available in respect of projects for which a commencement notice is submitted between 8 October 2025 and 31 December 2030.

Renewal of and updates to the Residential Development Stamp Duty Refund Scheme

The Residential Development Stamp Duty Refund Scheme provides for a partial repayment of the stamp duty paid on the acquisition of land, where the land is subsequently developed for residential purposes. This is subject to a number of conditions, including time limits relating to commencing work and completing development.  

Budget 2026 extends the refund scheme, which was due to expire at the end of this year, until 31 December 2030.

Certain positive changes were also announced to the time limits relating to commencing work and completing development. These have both been extended to 36 months, from 30 months. This should enable more tax-payers to avail of the refund scheme.

The Minister for Finance also announced that he would be providing for a full stamp duty refund to be claimed in respect of a multi-phase development at the commencement of the first phase of that development.

Residential Zoned Land Tax

The Minister for Finance announced the provision of a further opportunity for landowners to make a submission requesting a change in the zoning of their land (which currently appears on a local authority’s revised RZLT map for 2026). Subject to making this submission, this could potentially result in the relevant site being exempted from RZLT for 2026.

The Minister flagged that further changes to ensure that the RZLT legislation operates as intended are also being included in Finance Bill 2025. It is hoped that these changes will address certain technical issues with the RZLT legislation, which have impacted genuine development structures with unforeseen RZLT costs.

New Derelict Property Tax

A new Derelict Property Tax was announced. This new tax will be collected by the Revenue Commissioners and will replace the existing Derelict Sites Levy.

The Minister for Finance noted that the earliest that the tax would be in operation is 2027 and that it is envisioned that the rate would be no lower than the current 7% charge under the Derelict Sites Levy. It was announced that the new tax would be legislated for in next year’s Finance Bill.

In summary

Oveall, Budget 2026’s tax measures relating to housing should reduce costs and enhance the viability of new housing schemes, and apartments in particular. Further detail in respect of certain of the measures, particularly around RZLT and the new Derelict Property Tax, are needed and we will provide updates on these elements as they progress.

For further information in relation to this topic or any related matter, please contact your usual ALG Real Estate or Tax contact.