The new vacant homes tax (VHT) will be self-assessed and is expected to raise as little as €3 million a year.
It will be charged at a rate that is three times the property’s local property tax (LPT) rate.
Minister for Finance Paschal Donohoe said he is introducing the tax to increase the supply of homes for rent or purchase to meet demand.
Budget documents say the “primary objective” of the tax is to “change behaviour rather than raise revenue”.
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The tax, to be introduced in 2023, will apply to residential properties that are occupied for less than 30 days in a 12-month period. The new tax will be administered by the Revenue Commissioners.
There are to be a number of exemptions to ensure owners are not unfairly charged where a property may be vacant for a genuine reason.
These include properties recently sold or currently listed for sale or rent; properties vacant due to the occupier’s illness or long-term care; and properties vacant as a result of significant refurbishment work.
Budget documents say the measure “seeks to achieve an appropriate balance between incentivising owners of vacant homes to bring their properties back into use and not penalising homeowners for normal, temporary vacancy”.
Owners of vacant homes will be required to file an annual return declaring that their residential properties were vacant in the applicable 12-month period, indicating the LPT valuation that applies to the home.
This will be used to assess their VHT liability.
The tax will not apply to derelict properties or properties unsuitable for use as a dwelling that are not captured under the existing LPT system.
The yield is of the VHT is estimated at between €3 million and €4 million per year.
