Update on Residential Zoned Land Tax
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New measures have been introduced affecting the operation of the Residential Zoned Land Tax (RZLT) introduced under the Government’s “Housing for All” plan. Landowners may be able to take additional steps to limit and/or defer liability for RZLT that were not previously available.
The Residential Zoned Land Tax is a tax brought in as part of the Government’s “Housing for All” plan. The objective is to incentivise development on land that is serviced and zoned wholly or partly for residential use. Recent amendments to the legislation governing RZLT will potentially affect application of the liability. In addition, they will potentially introduce further avenues for deferring liability for certain landowners.
RZLT, from its introduction to now
The Finance Act 2021 introduced the RZLT and tasked local authorities with mapping relevant lands within its scope. Liability for RZLT was originally to take effect from 1 February 2024. The Act gave statutory rights to owners and third parties to make submissions on local authorities’ draft maps and to appeal certain outcomes to An Bord Pleanála in advance of that date.
The initial liability date was later pushed to 1 February 2025 under the Finance (No. 2) Act 2023 along with a postponement of mapping, submissions and appeals deadlines. Landowners will be liable to pay an annual tax equal to 3% of a relevant site’s land value from 1 February 2025.
RZLT generally applies unless an owner of a relevant lands can avail of a specific exclusion to RZLT, a statutory basis for deferral, or a change of zoning. The following exclusions, among others, apply:
- Existing residential properties subject to Local Property Tax
- Land used integrally in an on-site or adjacent business operation
- Sites subject to the Derelict Sites Levy, and
- Land used for specified uses for utilities, transport and social, community or recreational purposes
More recently, the Finance Act 2024 has introduced new measures in relation to landowners’ change of zoning requests and to criteria for deferral of RZLT.
Some key measures introduced under the Finance Act 2024
1. New opportunity to request rezoning
Landowners can request that a local authority amend the zoning of lands included within the scope of RZLT on the revised map published on 31 January 2025 from 1 February to 1 April 2025. Lands the subject of an existing planning permission or planning application for residential development will not qualify for rezoning. This opportunity to request rezoning follows previous application windows for landowners to request land rezoning in response to local authorities’ draft and supplemental maps produced since the introduction of RZLT. The opportunity to apply for rezoning has been introduced along with an exemption for RZLT liability arising for 2025 for any land that is the subject of a rezoning request, in response to the revised map of 31 January 2025. Subject to certain conditions, RZLT will not be charged and levied on these sites for this year.
2. Deferral of RZLT on the basis of planning permission
Subject to certain conditions, a landowner may now defer RZLT for up to 12 months from the date of a successful grant of planning permission for a relevant site.
Where development cannot commence because a grant of planning permission is under appeal or subject to judicial review proceedings by an unrelated party, a 12-month deferral period applies. This period starts from the date the grant of permission is ultimately upheld. If the permission is upheld, the landowner may be exempt from RZLT for the duration of the appeal or challenge.
After the deferral period commences:
- RZLT becomes due and payable at the end of the 12-month period, or earlier, if the land is sold to another person or company outside of the original owner’s corporate group
- If a landowner begins non-residential development on the land within the 12-month deferral period, RZLT will no longer be due or payable for the land or the relevant portion of it, or
- If a landowner commences residential development within the 12-month period, the landowner may continue to defer payment of RZLT from the date of the relevant commencement notice. RZLT can become due and payable again after a deferral on the occurrence of certain events, including certain changes of ownership and the permanent cessation of works without a certificate of completion.
Conclusion
The Finance Act 2024’s amendments are welcome developments for landowners who are potentially liable for RZLT. The new measures offer scope, particularly to owners of land with the benefit of planning permission for non-residential land use to avoid RZLT. Certain landowners who intend to commence and complete residential development may also be in a position to avail of further deferral opportunities.
Where landowners intend to avail of the opportunity to apply for rezoning, prompt action will be required to meet the 1 April 2025 deadline.
If you would like to discuss concerns regarding the imposition of RZLT on your land, please contact a member of our Real Estate team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
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