Explainer: Residential property tax and how it affects farms
The effects of the new residential zone property tax (RZLT) will come into focus for many farmers in the coming weeks.
Last week, local authorities began publishing maps showing where taxable properties are located. The Revenue Commissioners recently issued guidance on how the tax will work. Here is some of the most important information that affected landowners need to know:
For which country does RZLT apply?
Land designated and managed as suitable for residential development falls within the scope of RZLT, with certain exceptions noted below.
How much is the tax?
It is an annual tax calculated at 3 percent of the market value of the property in its jurisdiction.
How do I find out if my country is affected?
Land within the scope of the tax was identified on a land tax map with residential areas prepared by each local authority for their respective administrative area.
What is meant by “developed land”? “Serviced” means having access to necessary public infrastructure and facilities, including access to roads and footpaths, public lighting, sanitation, surface water drainage and water supply, required for the construction of housing and for which sufficient service capacity is available to provide Allow housing to be developed.
Example: Joan owns a farm on the outskirts of Dungarvan, Co Waterford. 5 hectares of Joan’s Farm are zoned for residential use in the existing zoning plan. As of January 1, 2022, the five-acre site had access to public services except for water and sanitation. The country does not meet the relevant criteria for RZLT on January 1, 2022.
Irish Water is upgrading rural water infrastructure in March 2023. Joan’s 5ha now meets the criteria for RZLT and will be included in a map being prepared and published by Waterford City and County Council.
Can I appeal?
Property owners have the opportunity to appeal to their local authority in the first instance against the inclusion of properties on the map and can then appeal to An Bord Pleanála (ABP). A landowner also has the option to apply to have their land’s zoning status changed, which will be evaluated by the local authority.
Example: Paul is a farmer in Co Kilkenny. Seven hectares of his land are designated for residential use and will be farmed as of January 1, 2022. His land appears on the draft residential land tax map released by Kilkenny County Council on 1 November 2022.
Paul is submitting an application to Kilkenny County Council to request a change in the zoning of his land. Kilkenny County Council evaluates Paul’s submission and decides that it is appropriate to make an amendment to its development plan. Following the zoning change, 5 hectares of Paul’s property are no longer designated as residential; 2ha of Paul’s land remains designated as suitable for housing and appears on the final map released by Kilkenny County Council on 1 December 2023. Paul will be liable to RZLT in respect of 2 ha of his land on February 1, 2024 and must pay the tax on or before May 23, 2024.
How do I calculate the tax due?
The RZLT rate is 3pc.
Example: Tom owns land subject to the RZLT in Naas, Co Kildare. Tom’s land was designated and serviced for residential development on January 1, 2022. The terrain was included in the final map released by Kildare County Council for the purposes of the RZLT on 1 December 2023. The site was valued at €1,500,000 on February 1st. 2024. Tom’s RZLT liability for 2024 is 3% of €1,500,000 = €45,000.
How is the tax paid?
The RZLT liability in relation to a Relevant Site is due for payment by the liable person on or before May 23 after the liability date to which the payment relates.
Example: Aisling owns a 100 acre farm in Co Cork. Two acres of farmland borders a nearby town and was designated and commissioned for residential use on January 1, 2022. The 2-acre site was included in the final map released by Cork County Council for the purposes of the RZLT on 1 December 2023. Aisling is required to register for RZLT. Aisling’s 2 ha site, which falls within the scope of RZLT, was valued at €200,000 on 1 February 2024. Your liability for 2024 is 3% of €200,000 = €6,000. Aisling has until May 23, 2024 to file an RZLT declaration and pay the €6,000 liability.
Is the tax deferred during the appeal?
The liable person may defer payment of any taxes due pending the completion of the appellate or judicial review process or the completion of the process relating to an amendment to a development plan.
Example: Áine is a farmer in Mayo. A portion of their land was designated for residential use and became operational on January 1, 2022. This location is included on the draft residential zoning property tax map released by Mayo County Council on November 1, 2022. Áine is unsuccessful in her filing with County Council to have her country removed from the map. The location is included in the final map released on December 1, 2023.
Áine is seeking a court review of the Mayo County Council decision in December 2023. Áine is liable to RZLT on February 1, 2024. On May 23, 2024, the outcome of the court review is unknown and Áine petitions to defer her payment of RZLT in the 2024 RZLT return. In August 2024, the court finds that the Mayo County Council decision was correct. Áine must amend the declaration for 2024 and pay the RZLT and interest due.
How is the property valued?
RZLT is a self-assessment tax based on the assessment of the location in question. According to Revenue, the following sources of information can be helpful when evaluating a website:
⬤ Information from local real estate agents or appraisers
⬤ Commercial real estate sale websites such as stupid.ie and myhome.ie
⬤ Newspapers or other media sources.
The IRS has recommended that owners not rely on a specific sale, such as the most recent sale at the site, to determine the market value of the property, but instead consider a group of relevant sales over recent periods.
Are there properties that are exempt from the tax?
In addition to the residential real estate exemption, certain types of land are exempt from the tax even though they are designated and managed for residential purposes. These are: Land that is designated as residential but constitutes an authorized development used for the exercise of a trade or profession by a company that is subject to commercial fees and that provides services to residents of adjacent residential areas, e.g. B. Shops or pubs, or workplace uses such as offices.
Registration for RZLT
A property owner must register with the IRS for RZLT if their location is included on a definitive residential land tax map and:
⬤ a relevant website that falls within the scope of the tax, or
⬤ a residential lot that is exempt from RZLT but has a garden/yard (living area) greater than 0.4047 ha.
https://www.independent.ie/business/farming/agri-business/finance/explainer-residential-zoned-land-tax-and-how-it-impacts-farms-42118165.html Explainer: Residential property tax and how it affects farms
