Budget 2023 has brought a wide range of changes and developments. There was a lot of speculation before the Budget was delivered in relation to likely changes affecting property and inheritance tax rates and bands. We set out below a snapshot of what has and has not changed in each of these areas.
A Vacant Homes Tax (VHT) will be introduced in 2023 for residential properties that are occupied for less than 30 days in a 12 month period. The tax will be three times the property’s base LPT liability (before taking account of any adjustment factor applied by a local authority). Exemptions will apply for properties unsuitable for use as a dwelling or those that are derelict or those that are for sale or rent. It is likely that a lot of second homes or holiday homes may fall within the net.
It is also likely that this tax will need to be dealt with if a property is being sold, like other charges on property. More information is needed in relation to how this tax will work.
The Help to Buy Scheme was extended until the end of 2024.
The Residential Development Stamp Duty Refund Scheme was amended to extend the date at which projects must commence construction to 31st December 2025. This is an important relief for those purchasing a site to build a house (whether a one off house or a site for a housing estate) and results in a refund of stamp duty so that the amount of stamp duty payable is 2% rather than the normal 7.5% non-residential rate.
Staying with stamp duty, the Young Trained Farmer and Farm Consolidation reliefs are to be extended until the end of 2025 (subject to EU approval).
No changes were announced in relation to Capital Gains Tax. The rate will stay at 33%.
The Capital Acquisitions Tax (CAT) rate of 33% remains and there were no changes announced for the CAT tax free thresholds. The tax free thresholds are as follows:
|Relationship of beneficiary to deceased||Threshold amount|
|Surviving spouse||Total exemption|
|A. Son, daughter or parent||€335,000 (Since 9 Oct 2019)|
|B. Brother / sister / nephew / niece / grandchild||€32,500 (Since Oct 2016)|
|C. Strangers||€16,250 (Since Oct 2016)|
The annual small gift exemption of €3,000 still applies and this can be a tax efficient way of drip feeding funds to the next generation over a period of years.
The Finance Bill will be issued in late October and details of the new reliefs will be outlined then.
If you have any questions or queries in relation to these changes, please contact Owen Burke at any stage on email@example.com or +353 (0)1 6624747.Back to Full News
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About the Author
Owen is a senior associate solicitor, Trust and Estate Practitioner and Chartered Tax Adviser in the Private Client team at Hayes. He specialises in Wills, Probate, Succession and Tax Planning and Enduring Powers of Attorney. He is a full member of the Society of Trust and Estate Practitioners (STEP). He is also a member of the STEP Ireland committee and the Dublin Solicitors Bar Association Probate and Taxation Committee.