New residential zoned land tax

Revenue has recently published a guidance on the new tax, Residential Zoned Land Tax (RZLT), introduced by section 80 of Finance Act 2021 contained in Part 22A of the Taxes Consolidation Act 1997 (TCA 1997). The guidance notes are detailed, and the following is an overview of the tax.

RZLT is an annual tax, calculated at 3% of the market value of land within its scope.

Where land is within the scope of the tax on 1 January 2022, the tax will be charged from 1 February 2024 onwards.

The first date for filing of a return and payment of the tax is by 23 May 2024, on land which on or before 1 January 2022, is zoned as being suitable for residential development and is serviced and on which development has not commenced before 1 February 2024 (with certain exclusions).

Where land comes within scope after 1 January 2022 (zoned as suitable for residential development and/or serviced after 1 January 2022), the tax will be first due in the third year after it comes within scope. The tax will continue to be payable each year in respect of the land unless a deferral of the tax applies or the land ceases to be liable to the tax.

The liable person for the purposes of RZLT is the owner of the relevant site, that is, land that meets the criteria to be included on a final or revised residential zoned land tax map and is not a residential property, on the valuation date.

The first valuation date will be 1 February 2024 on land that is within the scope of the tax on 1 January 2022. Thereafter, the relevant site is to be valued on 1 February every three years following the first valuation, subject to any deferral or abatement of RZLT that may apply.

The tax may be deferred in certain circumstances, including where residential development has commenced. Tax deferred while residential development is ongoing, will, on the making of a claim, not be payable (or abated) where development is completed by the end of the timeframe set out in the planning permission granted in respect of that land. Tax deferred may only be partially payable where the residential development is partially completed within the life of the planning permission

The tax does not apply to existing residential properties; however, owners of residential properties with yards and gardens greater than 0.4047 hectares will need to register for, but not pay, RZLT.

The legislation requires each local authority to prepare and publish a map identifying land within the scope of the tax. These maps will be updated annually for changes in the zoning and servicing status of land.

RZLT will operate on a self-assessment basis. Owners of land within scope will, from 2024 onwards, be required to first register for RZLT and then make an annual return to Revenue and, where appropriate, pay any liability in May of each year. The legislation requires landowners to maintain detailed records so that Revenue may verify tax payable, as well as claims for exemption, abatement or deferral of the tax. Revenue may appoint an independent expert in the course of verifying these matters.

In cases of non-compliance, including undervaluation of the land in scope and late filing of returns, interest, penalties and surcharges will apply as appropriate.