“Some of my father’s lands were recently included in the County Development Plan as suitable for residential development. My father has no notion of developing it or indeed selling it for development. It has been leased for a good number of years and we are fearful that it might be subject to the residential zoned land tax. Is there anything we can do to avoid this happening?”

Aisling responds

The residential zoned land tax (RZLT) was introduced in Finance Act 2021. It is an annual tax, calculated at 3% of the market value of land within its scope. The tax applies to land that, on or after 1 January 2022, is zoned as being suitable for residential development and is serviced, with certain exclusions.

Minister for Finance Paschal Donohue referred to it in his recent budget speech, when he said that in order to identify the zoned land within the scope to tax, maps are being prepared by local authorities who will publish their first drafts on 1 November 2022. Following publication of the maps, any person will have the opportunity to apply to their local authority to have the zoning status of their land amended as part of a variation process. He said that in Finance Bill 2022 (due to be published on 20 October 2022) he will bring forward a number of amendments to streamline the operation of the RZLT and ensure it is efficiently administered.

Land zoning and serviced land

Land must be zoned for residential use or for a mixture of uses that includes residential use for it to be subject to RZLT. It is only when land is zoned for residential use and has access to necessary infrastructural services to allow for development to proceed that it is within the scope to tax. “Serviced” means having access to the necessary public infrastructure and facilities including road and footpath access, public lighting, foul sewer drainage, surface water drainage and water supply necessary for dwellings to be developed and for which there is service capacity available sufficient to enable housing to be developed.

Exclusions from the scope of RZLT

  • It does not apply to existing residential properties. However, owners of residential properties with yards and gardens greater than 0.4047ha (1 acre) will need to register for the RZLT, but not pay it.
  • Land, while zoned residential, is used by a business to provide services to adjacent residential areas, for example shops or pubs, or employment uses, such as offices.
  • Land, while zoned residential or a mixture, the land is integral to the operation of a business carried out on or beside it, being land that is not vacant and idle.
  • Land that is required for social, community or Governmental infrastructure.
  • Land subject to a statutory designation such as a nature reserve.
  • Land in respect of which the derelict sites levy is payable.
  • Land affected in terms of its physical condition eg contamination or presence of historic or archaeological artifacts.
  • local authority maps Timeline

    Draft map – key dates

  • The local authority will publish the draft map not later than 1 November 2022.
  • A person may make a submission regarding the inclusion or exclusion of land on the draft map to the local authority not later than 1 January 2023.
  • In the case of a submission made by an owner seeking to have their land excluded from the map or to change the date on which the land first met the criteria, the local authority will notify the owner of its determination, not later than 1 April 2023.
  • The local authority, before making its determination, may request additional information from the owner, or other third party, within 21 days of receipt of the submission.
  • The owner, or other third party, has 21 days, from the request being made, to provide the information requested to the local authority.
  • A landowner who wishes to appeal the local authority determination to An Bord Pleanála (ABP) may do so not later than 1 May 2023.
  • ABP will notify the owner of its determination not later than 16 weeks from the date of the notice of appeal.
  • An owner of land which was zoned as suitable for residential development and serviced on 1 January 2022, and on which development has not started before 1 February 2024, will be liable to file a return and pay RZLT due in respect of such land on or before 23 May 2024.

    Where the land is zoned as suitable for residential development and/or serviced after 1 January 2022, tax will be first due in the third year after it comes within the 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.

    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.

    Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, Aisling Meehan, Agricultural Solicitors does not accept responsibility for errors or omissions howsoever arising. E-mail: aisling@agrisolicitors.ie

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