Residential Zoned Land Tax

What is it?

The Residential Zoned Land Tax (RZLT) 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.

In order to fall within the scope of the RZLT 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. Importantly the land must be serviced. Serviced land is defined as having access to public infrastructure and services necessary for homes to be developed.

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.

When is the RZLT due?

The first liability date for the tax has been deferred from 1st February 2024 to 1st February 2025.

The RZLT will be first due on the 1^st  of February 2025 and payable on or before the 23^rd  of May 2025 for land that met the above relevant criteria on the 1^st of January 2022.  Where land becomes both zoned and serviced after the 1^st of January 2022, RZLT will be chargeable in the third year after the year in which it comes within the scope of the tax. Local authorities will update these maps annually from 2025 onwards for changes in the zoning and servicing status of land.

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 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.

Finance (No. 2) Act 2023 inserted a provision to allow any landowner, including farmers, to apply to have their land zoning changed, where that land is included on the annual draft map for 2025. Should a landowner wish to amend the residential or mixed use zoning of their land where it is identified on the RZLT map, they can request a variation of the zoning within the appeal period.

Key dates for the RZLT

The annual draft map for the 2025 year was published by each local authority on 1^st February 2024 ahead of the publication of the revised final map in January 2025 outlining lands within their functional areas which met the relevant criteria to fall within the scope of the RZLT.

In response, landowners were required to make a submission to their local authority by no later than:

• 1^st April 2024 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

• 31^st May 2024 for submissions regarding rezoning requests.

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

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