Residential Zoned Land Tax and Development Sites

From February 2024, landowners and developers will be liable for Residential Zoned Land Tax (“RZLT”) on land identified as subject to RZLT on the final RZLT maps (“relevant sites”). They must pay the RZLT on or before 23 May 2024. The annual charge of 3% of the market value of the relevant site will be an additional cost to be factored into the cost of holding and developing land.   

RZLT is designed to incentivise landowners and developers to activate existing planning permissions for housing, or to engage with planning authorities and seek planning permission on land which is zoned as being suitable for residential development and appropriately serviced. In this article we consider some of the circumstances in which RZLT may be deferred, abated, or ceases to apply as development of a relevant site progresses.

Planning Applications and Third Party Appeals

During the planning process, RZLT is generally payable on relevant sites. Relief may be available where planning permission has been obtained but development is delayed due to a third party appeal, judicial review, or appeal of a determination of judicial review in relation to the planning permission (a “relevant appeal”).   

The relevant site remains subject to RZLT while the relevant appeal is ongoing, but the liable person may elect to defer payment of the RZLT in the RZLT return. If the planning permission is upheld, all RZLT paid from the date on which the appeal was first made to the date on which the relevant appeal was determined shall no longer be due and payable and (if not previously deferred) may be reclaimed.  

If the grant of planning permission is overturned, the liable person must amend each RZLT return in which a deferral was claimed and pay any tax and interest due. If the owner sells the property before a relevant appeal is determined, the liable person must amend each return in which a claim for deferral was made, and pay any tax and interest due prior to completing the sale.

Residential Development

When a commencement notice is lodged with the local authority for permitted development consisting wholly or partly of residential development, all or part of the RZLT due from the next liability date will be deferred:

• Where the development permitted by the planning permission is wholly residential development all RZLT payable shall be deferred. 

• Where the planning permission for residential development relates to part only of a relevant site and the remainder is not being developed, a deferral of RZLT may apply to that portion of the relevant site in respect of which a commencement notice for residential development has been lodged. RZLT remains payable on the balance of the original site.

• For mixed use developments, the portion of RZLT deferred shall be calculated as 3% of the market value of that part of the relevant site being used for residential development, having regard to the planning permission.  
  

The deferral will apply automatically provided that the liable person files an annual RZLT return for each year in which a deferral applies.  All RZLT returns due during a period of deferral must be made on time for any subsequent claim for abatement to be accepted.

If the residential development is fully completed and certificates of compliance on completion lodged with the local authority prior to the expiry of the planning permission period, then the deferred RZLT shall no longer be payable.  

If residential development is partially completed within the life of the planning permission granted in respect of the site, a portion of the deferred RZLT may be abated. The amount of deferred RZLT payable is determined on a sliding scale depending on the extent of completion.  

Deferred RZLT will become due and payable if:

• the works on the site permanently cease, or

• there is a change in ownership of the site, or

• the planning permission expires,

prior to certificate of compliance on completion being lodged with the local authority.

Non-Residential Development

Commencement of permitted non-residential development does not result in RZLT being deferred, but instead brings a relevant site outside the scope of the tax. The relevant site, or the part of the site being developed for non-residential purposes, shall cease being subject to RZLT from the date of the commencement notice, provided that substantial activity is carried out within a reasonable period. Any RZLT paid up to the date of the commencement notice will not be refundable.

The liable person must make a declaration to Revenue within 30 days of lodging the commencement notice and maintain records showing that the site is outside the scope of RZLT.

If you wish to discuss any of the issues raised in this article, please contact Alison O’Sullivan, Neil Dunne, or Ronan Egan from our Property/Real Estate Team, Lee Squires or Julie Herlihy of our Tax Team or your usual ByrneWallace LLP contact. 

DISCLAIMER: This article does not contain legal and taxation advice. You are advised to seek independent professional advice on any specific queries.  All information is current as at 30 August 2023.