What is the RZLT?
The Residential Zoned Land Tax is a new tax that was introduced as part of the Finance Act 2021. Its aim is to incentivise the activation of zoned and serviced residential or mixed-use (including residential) lands in order to increase the supply of housing to the market.
What type of land qualifies?
To fall within the scope of the RZLT, the following relevant criteria must be met:
- The land must be zoned residential or mixed use (including residential) within a Development Plan, Strategic Development Zone Planning Scheme or a Local Area Plan.
- The land must be serviced. Serviced land is defined as having access to public infrastructure and services necessary for homes to be developed. This includes road/footpath access, public lighting, foul sewer draining, surface water draining and water supply.
There must also be sufficient service capacity available for such residential development.
When is the RZLT due?
The Residential Zoned Land Tax will be first due on the 1st of February 2024 and payable on or before the 23rd of May 2024 for land that met the above relevant criteria on the 1st of January 2022. Where residential land becomes both zoned and serviced after the 1st of January 2022, RZLT will be chargeable in the third year after the year in which it comes within the scope of the tax.
What is the RZLT rate?
RZLT will be calculated annually at 3% of the market value of the land. The RZLT is self-assessed, therefore the liable person determines the market value. Market value is defined as a price in which an asset might reasonably be expected to achieve on a sale in the open market. Surcharges may apply if the residential zoned land is later found to be undervalued.
Who is liable to pay the RZLT?
The liable person can include the property owner, a trustee or any person whose interest will allow them to activate zoned and serviced residential or mixed-use (including residential) lands.
Are homeowners liable to pay the RZLT?
Residential properties with associated curtilage which does not exceed 0.4047 hectares (1-acre), and who are liable for local property tax, do not fall within the scope of the Residential Zoned Land Tax and are not required to register the property for RZLT.
Residential properties with associated curtilage which does exceed 0.4047 hectares (1-acre), and who are liable for local property tax, do not fall within the scope of the RZLT either but must register the property for RZLT.
Are there any other exemptions?
Exemptions exist for zoned and serviced residential or mixed-use (including residential) lands where:
- The lands are unable to be developed due to the need for significant remediation.
- The lands are known to contain significant archaeological remains.
- The lands are used for certain infrastructure or facilities including utilities, transport, social, community or recreational purposes.
- The lands are currently on the Derelict Sites Register and which a levy is payable in accordance with the Derelict Sites Act 1990.
- The lands are considered integral to the operation of a business carried out on or beside it.
What has happened so far in terms of the implementation of the RZLT?
Draft maps were published by each local authority by the 1st of November 2022 outlining lands within their functional areas which met the relevant criteria to fall within the scope of the Residential Zoned Land Tax.
In response, landowners were required to make a submission to their local authority by no later than the 1st of January 2023 if:
- They felt that their lands didn’t meet the relevant criteria to fall within the scope of the RZLT and therefore should be removed from the draft maps.
or
- They wished to change the zoning status of their lands.
What will happen next and what should landowners be aware of?
Local authorities are required to revert to all landowners regarding whether their lands have been retained or removed from the draft maps by no later than the 1st of April 2023.
Landowners can appeal this outcome to An Bord Pleanála by no later than the 1st of May 2023. An Bord Pleanála will notify all landowners of their decision within 16 weeks from the date of the notice of appeal.
Local authorities will publish supplemental maps by the 1st of May 2023 which will include lands which met the relevant criteria to fall within the scope of the RZLT after the 1st of January 2022 and to reflect any changes in zoning that has occurred.
Once again, landowners can make a submission to their local authority by no later than the 1st of June 2023 if:
- They feel that their lands don’t meet the relevant criteria to fall within the scope of the RZLT and therefore should be removed from the supplemental maps.
or
- They wish to change the zoning status of their lands.
Local authorities are required to revert to all landowners regarding whether their lands have been retained or removed from the supplemental maps by no later than the 1st of August 2023.
Landowners can appeal this decision to An Bord Pleanála by no later than the 1st of September 2023. An Bord Pleanála will notify the landowner of the outcome within 8 weeks from the date of the notice of appeal.
Local Authorities will publish final maps by the 1st of December 2023 which will reflect the outcomes of submissions and appeals and any zoning changes which have taken land out or brought land within the scope of the RZLT. Landowners must register with the Revenue if their lands are included on the final map.
Commencing in 2025, the final maps will be updated annually for changes in zoning and serviced land. A revised final map will be prepared and published by the 31st of January each year.
Knight Frank have prepared a list of key dates that landowners should familiarise themselves with.
What action terminates the landowners RZLT liability?
Landowners will remain liable for the Residential Zoned Land Tax until one of the following happens:
- Homes are built on the site. Although the RZLT may be deferred during construction, it is only when the homes are built that the land falls outside the scope of the RZLT.
- Where the land was zoned for both residential and other development, and permission is granted for development other than residential, the land will fall outside of the scope of the RZLT upon the commencement of the construction of the non-residential development.
- If the zoning of the land is changed.
- If it is found, after the production of the final map, that the land cannot be developed, for example because archaeological remains were discovered, the land will fall outside the scope of the RZLT.
If you have any questions or require any advice in relation to any aspect of the Residential Zoned Land Tax, please contact Knight Frank’s Development Land Team at (01) 634 2466 or at enquiries@ie.knightfrank.com