Government unveils new retrofit tax incentive for landlords

A new tax scheme aimed at incentivising landlords to undertake retrofitting works to improve the energy efficiency of their properties will support the “continued participation” of small-scale landlords in the Irish rental market, the Department of Finance has said.

The new tax deduction will provide landlords with a €10,000 per property tax deduction against rental income for certain retrofitting expenses for a maximum of two properties.

Designed to supplement the Sustainable Energy Authority of Ireland’s (SEAI’s) home energy grant scheme, the deduction is contingent on the property owner having received a grant for the same retrofitting works and can be applied against any expenses covered by the SEAI scheme.

To qualify, landlords must be tax compliant and registered with the Residential Tenancies Board, the department said on Thursday, and the property must remain a rental property for at least two years after the work has been completed.

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The department said that more details will be set out in the Finance Bill which is currently at the committee stage in the Dáil.

The Government has been under pressure to stem the flow of small, private landlords leaving the market. Many have taken advantage of soaring property valuations to sell up, intensifying a shortage of properties available to rent across the Republic.

Separately, the coalition’s ambitious national retrofitting programme – aimed at delivering 75,000 home upgrades a year from 2026 to 2030 to achieve an overall target of 500,000 by the end of the decade – has faced significant headwinds due to policy delays, inflation and supply chain constraints.

The Oireachtas environment committee was told recently that the Government’s low-cost loan scheme to provide funding for retrofit programmes, due to be in place over the summer, will not begin until the first quarter of next year.

In a statement on Thursday, Minister for Finance Paschal Donohoe said: “Landlords play an important role in the private rental sector and this measure is aimed at attracting and retaining small-scale landlords in that market. This new tax deduction is in addition to the SEAI’s grants and the combination of both measures offers substantial support to landlords to retrofit their rental properties. This will also assist in improving the quality and comfort of homes in the private rental sector and as such will be of benefit to individuals and families who are renting.”