Finance Act 2021 introduced a new form of land tax – the Residential Zoned Land Tax (RZLT). The RZLT replaces the Vacant Site Levy. The following commentary outlines the principle features of the RZLT.
As a key part of the Government's "Housing for All" plan, the RZLT imposes a 3% levy on the value of certain land to encourage the early development of land suitable for residential housing.
Land in scope for the Residential Zoned Land Tax
RZLT applies to any land that is zoned for residential use, which is serviced, i.e. capable of being connected to the necessary public infrastructure, i.e. roads, footpaths, lighting, sewerage etc.
Residential properties are excluded from the tax; however, it is important to note that there may be a requirement to register for RZLT where a residential property has a garden or yard over 1 acre.
Interestingly, many landowners may be required to register for the RZLT but are unaware of this reporting obligation.
Each local authority will publish a map detailing the lands falling into this category within its boundaries. It is recommended that if there is any doubt, landowners should check the status of the land in the zoning maps, which are available to view online.
Exclusions from the Residential Zoned Land Tax
There are several situations where lands may be excluded from the RZLT, including:
Land liable to the Derelict Sites Levy.
Land zoned for residential use, which is used by a trade or business liable for commercial rates, provides services to residents of the nearby residential areas, e.g. shops, pubs and cafes.
Existing habitable dwellings (properties with gardens larger than 1 acre may be required to register for the RZLP, notwithstanding that there may be no tax liability).
Land used for certain facilities/infrastructure, i.e. land on hospital grounds, schools and train stations.
This list is not exhaustive.
Filing your Residential Zoned Land Tax
RZLT is a self-assessed tax, and the responsibility for filing and making payments rests with the landowner.
Where land is within the scope on 1 January 2022, the first valuation date for RZLT is 1 February 2024. After that, the relevant site will be valued on 1 February every three years following the first valuation.
As noted, an existing residential property may appear on local authority maps prepared for RZLT, even though RZLT is not payable in respect of residential properties. A landowner will have an opportunity to submit a request to change the zoning status of their land.
As mentioned, a rate of 3% applies to RZLT based on the market value of the land. RZLT will not be deductible for corporation tax, income tax or capital gains tax purposes.
Matthew's land in Cork was zoned for residential development and services on 1 January 2022. The site value on 1 February 2024 was €750,000. Matthew's RZLT liability for 2024, 2025 and 2026 is €22,500 per year. Matthew should revalue his site at the next valuation date of 1 February 2027.
Deferral of Residential Zoned Land Tax
If an RZLT liability arises in respect of zoned and serviced land, a payment deferral is possible in certain circumstances:
In situations where there is an ongoing appeal or judicial review related to the RZLT maps.
In situations where planning permission cannot proceed due to an appeal to An Bord Pleanála, or a judicial review about the grant of planning permission.
Where residential development has commenced on a site.
If a landowner fails to fulfil their RZLT obligations, Revenue may withhold the owner's tax clearance certificate.
Where the relevant site's value is undervalued in a return submitted to Revenue, surcharges of up to 30% of the RZLT can also be imposed. Interest could also accumulate at 8% per year on any outstanding RZLT that remains unpaid.
We encourage all land and property owners to check if they may be subject to the RZLT by referring to the map provided by their local authority to determine if they must register or pay the RZLT.
If a payment is required, the pay and file deadline is 23 May 2024.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars tax team below:
Mazars was delighted to participate in the 2023 annual tax advisors survey with the Business Plus, which was published in November. Frank Green, Head of Tax, responds to editor Nick Mulcahy’s questions.