The introduction of a one-year Mortgage Interest Tax Relief for some homeowners who have borne the brunt of interest rate hikes in the last year has been announced in Budget 2024.
Those eligible to apply will have had an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500,000 at the end of last year.
Relief will be available on the increased interest paid on the mortgage in the calendar year 2023 as compared with the amount paid in 2022, at the standard rate of 20% income tax.
The relief will be capped at €1,250 per property.
"Approximately 165,000 mortgage holders will benefit from this measure with an estimated cost of €125m," Minister for Finance Michael McGrath said.
Help-to-Buy scheme extended
The minister also announced an extension to the Help-to-Buy scheme to the end of 2025 and he said he will consider across next year if any changes are needed to the scheme.
He noted that the scheme has supported over 40,000 people in buying their own home.
The extension of the Help-to-Buy scheme has been widely welcomed. Pat Davitt IPAV Chief Executive said the scheme has been critically important in a market that is "reeling from the aggressive rise in interest rates and consequent tightening of lending conditions by banks."
Mr McGrath told the Dáil that housing is undoubtedly the biggest domestic challenge facing the country today and remains a top priority for Government.
The minister also said today he would introduce a temporary tax relief which will mainly benefit small landlords.
He said that subject to certain conditions being met, rental income of €3,000 for the year 2024, €4,000 for 2025 and €5,000 for the years 2026 and 2027, will be disregarded at the standard rate.
"An important condition of this measure is that the properties held by the landlord availing of the relief must remain in the rental market for four years, otherwise the full amount of the relief will be clawed back," he stated.
Property group DNG said the relief will do little or nothing to convince small landlords to remain in the rental sector. Paul Murgatroyd, Director of Research at DNG, said, "if the property on which relief is granted does not remain in the rental sector for the full term of the scheme the full amount of relief granted will be clawed back".
Mr McGrath also said the Vacant Homes Tax, introduced last year, will be increased to five times the property's existing basic Local Property Tax rate.
The increase will take effect from the next chargeable period, starting in November.
On Residential Zoned Land Tax (RZLT), the minister said he would extend the liability date of the tax by one year to allow for the planned 2024 review of maps to take place and to afford affected people with a further opportunity to engage with the process.
He said the RZLT was an important initiative to activate suitably zoned and serviced land for housing.
House completion targets expected to be exceeded
Minister for Public Expenditure Paschal Donohoe has told the Dáil that targets for the completion of 29,000 housing units this year are expected to be exceeded.
Mr Donohoe said €2.6bn of the just under €7bn to the Department of Housing, Local Government and Heritage would be allocated towards capital investment in housing.
"This capital provision will be supplemented by Land Development Agency investment and Housing Finance Agency lending, resulting in an overall capital provision for housing of over €5bn for 2024," the minister said.
Of that, €1.9bn in capital funding would go towards the delivery of 9,300 new build social homes.
€265m would be allocated to support the delivery of 6,400 affordable homes next year.
€242m will go to homeless services and accommodation with a further €35m in capital funding to support the Housing First initiative and house homeless adults in permanent homes with wraparound supports.
€90m will be allocated towards the retrofitting of social housing next year.
A further €207m in funding will go towards bringing back into supply vacant and derelict units.
He reaffirmed the Government's commitment to Housing for All, which targets the delivery of 300,000 new homes by 2030.
