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February 23, 2025
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Investment funds to escape 6% ‘mansion tax’ as Finance Bill published – The Irish Times


Investment funds buying apartment blocks will escape the new 6 per cent stamp duty on properties valued at over €1.5 million, according to proposals in the Finance Bill, published on Thursday.

The Bill, which gives effect to the budget measures, also includes all the income tax and business measures already signaled in the package, including the €1.6 billion personal tax package.

It introduces a new 6 per cent residential stamp duty rate – the so-called mansion tax – on the balance of property sales over €1.5 million, although it will not apply to any acquisition involving three or more apartments.

Robert Fitzgerald, tax partner at Grant Thornton, said the tax “therefore excludes transactions whereby an investor is acquiring an entire apartment block” and will allay fears expressed in the private rented sector that it would limit investment in this area from major funds.

The existing rates – 1 per cent on the first €1 million and 2 per cent on the balance – will continue to apply to binding contracts in place prior to October 2nd “provided the executed instrument contains a statement to this effect and is executed before 1 January 2025.”

The Government has avoided introducing any major new initiatives in the Finance Bill, which still runs to over 200 pages, and close attention will be paid to the timing of its passage through the Oireachtas which may give a clue about the election date.

Minister for Finance Jack Chambers said in a statement that he looked forward “to bringing this important legislative instrument through the Oireachtas over the coming weeks.”

As well as the personal tax changes made known on budget day, it includes business supports for the film sector and for start-ups, and changes to gambling rules to ensure new regulation of the sector can operate properly.

In one relatively minor change that had not been flagged, VAT at the standard rate is to be applied to “plant based drinkable products” which are defined as juices and drinks extracted from plants, grains, seeds of pules and are currently zero rated.

According to Emma Broderick, head of indirect tax at Grant Thornton, standard rate VAT already applies to fruit and vegetable juices but consumers and retailers may now fear it could be extended further to non-dairy based milk alternatives such as oat and almond milk, currently also subject to the zero per cent rate.

Reliefs flagged for capital gains tax when an owner retires and the business passes to child or others are also included in the bill. The new inheritance tax thresholds, which applied from the day after the budget, are also provided for in the Bill, as are excise and carbon tax changes which are also already in force.

The Finance Bill also includes the compromise agreed by Coalition leaders to allow the residential zoned land tax (RZLT) to proceed. It is an annual tax to be changed at 3 per cent of the market value of the land involved, but its implementation had been delayed because of fears that many farmers operating on zoned land close to cities and towns would be charged.

Amendments to the original rules included in the Bill “will provide for a further opportunity for RZLT landowners to seek a change in zoning in 2025 to a zoning which reflects the economic activity they undertake on the land.”

Provisions of the Bill will also allow for a 12-month deferral of RZLT liability between the grant of planning and commencement of development, exemption during judicial review proceedings brought by a third party as well as other technical amendments.



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