As part of Budget 2026, the Government has announced a significant VAT reduction aimed at improving the viability of apartment construction. From tonight until the end of December 2030, the VAT rate on the sale of completed apartments will fall from 13.5 percent to 9 percent.
Minister for Finance Paschal Donohoe said the measure is intended to close the “viability gap” that has made many apartment projects financially challenging. The reduced rate forms part of a wider strategy to encourage the delivery of higher density housing in urban areas.
Targeted Tax Measures for Cost Rental and Apartment Development
To further support supply, the Government will exempt rental profits earned from homes within the Cost Rental Scheme from corporation tax. This aims to strengthen the financial sustainability of cost-rental developments and expand affordable options for long term renters.
In addition, an enhanced corporation tax deduction will be introduced for specific construction and conversion costs associated with apartment developments. The relief will apply both to new apartment construction and to the conversion of non-residential buildings into residential units, with the objective of improving project viability across the sector.
The enhanced deduction will be available for qualifying projects that submit a commencement notice between 8 October 2025 and 31 December 2030.
