Urgent call for property-based tax incentive in Budget 2026

Gearóid O’Sullivan discusses the headline proposals in this year’s CCAB-I Pre-Budget submission, aimed at addressing the ongoing housing shortage in Ireland

The question of how we solve the housing crisis has yet to be answered, it seems.

In this year’s Pre-Budget 2026 submission, Chartered Accountants Ireland, under the auspices of the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I), has laid the grounds for considering a property-based tax incentive as a further policy lever to stimulate private capital.

The Central Bank of Ireland estimates that Ireland requires 52,000 homes annually to meet demand, and the Government recently committed to ramping up housing targets to 60,000 homes a year by 2030.

Last year, however, overall residential completions were 6.7 percent lower than in 2023, with apartment completions down by 24.1 percent.

In Ireland, apartments and flats account for just 14 percent of all housing stock, compared to a 40 percent average across all Organisation for Economic Co-operation and Development (OECD) countries.

As a result, Ireland’s housing stock lacks the flexibility to meet the increasing demand for housing arising from population growth and the rise of single-person households, particularly in urban areas.

Despite the potential for apartment living to boost housing supply and allow high-density living in urban areas, however, the slowdown in apartment completions raises the prospect of a market failure, particularly at a time of record demand in the country.

Recent research suggests that the cost of developing apartments is making such developments unviable. This is a market failure, and the Government must consider further policy levers to support the completion of such dwellings.

It is against this need-driven backdrop that, in this year’s Pre-Budget 2026 submission, we are calling for a property-based tax incentive to stimulate investment in apartments, independent living facilities and student accommodation.

A recent report compiled by the four local authorities in Dublin examined residential developments of 10 units or more. The report noted that, of the 82,700 sites with planning permission, 84 percent of those permissions relate to apartments. Just 8,973 of those permissions have led to completed dwellings, however. While work has commenced on 26,492 dwellings, work has yet to begin on the remaining 56,208 units.

The introduction of a property-based tax incentive raises two primary concerns.

The first is obviously the hangover from the runaway property-based tax reliefs of the Celtic Tiger years.

The second is the need for European Union State Aid approval and the impact the prospect of such a tax relief could have on investment in the short-term.

Assessing the impact of tax breaks on the residential property market during the Celtic Tiger, a report published by the OECD in June 2006 considered whether Irish house prices had overshot their fundamental value.

The OECD report determined that 90 percent of the house price increases from 1995 to 2005 were justified by fundamental factors, such as rising incomes, lower interest rates and demography. The OECD report suggests that property-based tax incentives did serve a purpose in delivering housing at scale at the time.

Many of those reliefs were rolled over beyond their useful life, however. Combined with seemingly limitless access to credit, this encouraged investment in properties that might not otherwise have been developed.

The key lesson from the tax reliefs designed in the 2000s is that, in order to be cost-effective, such reliefs must be targeted, time-limited and regularly reviewed.

Those same tax reliefs produced the intended results, measured in terms of hotels, student accommodation and nursing homes built during that time.

It is with all this in mind that Chartered Accountants Ireland is recommending that a tax incentive for today’s market should focus on apartments, independent living facilities and student accommodation.

These types of dwellings can deliver housing at scale and at the appropriate density in urban areas.

In terms of how this relief should be designed, we need a capital allowance for investors, which can be offset against rental income arising on their investments.

This could stimulate the much-needed private capital to support the Government aim of building 60,000 homes per annum by 2030.

The scale of these ambitions mean that Ireland’s housing mix needs to be supported by a suitable supply of apartments.

In terms of independent living facilities and student accommodation, such dwellings should free up much needed space in homes more suited to younger families.

Coming back to the need for EU State Aid approval, there is a concern that, if a measure requires approval, completion of this process could take anywhere from six months to a year or more.

The problem this presents from a policy point-of-view is that investors may delay investment if there is a prospect of a tax relief around the corner.

This could drive completions even lower than the 2024 rate. However, given that completions are down anyway, this suggests that financial factors are already contributing to a slowdown.

We, therefore, need to stimulate investment if we are realistic about meeting our 2030 targets.

The solution to the housing problem is, of course, multifaceted. To presume a tax-based policy lever is the “white knight” in the Government’s arsenal misses the aim of such a measure.

It should instead be introduced as part of a range of measures that together signal to the investment community that Ireland is a good place to do business.

Fundamentally, we need to cohere a presently disparate system into something that functions efficiently.

The Minister for Public Expenditure, Infrastructure, Public Services, Reform and Digitalisation, Jack Chambers TD, has signalled his intention to address systemic issues exacerbating already challenging market conditions.

The Minister recently established the new Accelerating Infrastructure Taskforce to oversee his Department’s programme of reform to unlock barriers and accelerate infrastructure delivery.

Addressing this aspect of the housing crisis will arguably be the most important step to meeting the scale of our 2030 ambitions.

We are confident that, if properly designed and periodically reviewed, the perils of Celtic Tiger-era reliefs will be avoided, and the benefit of those lessons will ensure a targeted, time-limited and effective relief.

While it is important to look to the past, we must also look ahead and embrace innovative thinking.

Tax reliefs for property investment have produced the intended results in the past, and the economists and legislative experts working with the Department of Finance are suitably placed to ensure that a property-based tax incentive in this Budget could produce those intended results again.

Gearóid O’Sullivan is Head of Tax at Chartered Accountants Ireland