Budget 2026: What Irish Builders and Developers Need to Know (VAT, Deductions & Cashflow Planning)

Budget 2026: What Irish Builders and Developers Need to Know

Published: October 2025
Author: Amergin Consulting Ltd.
Target Audience: Builders, Developers, Quantity Surveyors, Construction CFOs, and Real-Estate SMEs (5–50 employees)
Book a meeting: https://calendly.com/amergin-group_free/30min

Executive Summary

Budget 2026 Ireland delivers a decisive message for the construction and real-estate sector: the Government wants builders to build.

With an extended 9% VAT rate for new apartments, enhanced capital-allowance deductions for project investments, and continued public-housing funding under Housing for All, the Budget creates both opportunity and obligation for developers.

At the same time, carbon-tax and payroll pressures demand sharper project cashflow control. Builders who plan budgets in Q4 2025 will enter the new year ready to capture tax reliefs, manage liquidity, and protect margins as costs evolve.

Key takeaway: Budget 2026 rewards proactive financial planning. Firms that model VAT, cost deductions, and cashflow accurately can reduce tax outlay by 10–15%, while those that delay risk losing profitability through missed allowances or compliance errors.

Quick Facts: Construction & Property in Budget 2026

Measure What It Means for Builders Practical Impact
Reduced VAT (9%) on new apartments Applies to qualifying multi-unit projects until 2030 Boosts viability of residential developments and build-to-rent schemes
Enhanced Capital Allowances for Construction & Green Assets 100% write-off in Year 1 for qualifying equipment and building improvements Immediate tax relief on plant and energy-efficient capex
Housing for All Funding (€5 billion+) Sustained public-sector projects through 2026 Strong project pipeline for contractors and suppliers
Carbon Tax €71/t CO₂ (2026) Raises diesel and fuel prices from May 2026 Higher operating costs → need for fuel-efficiency planning
VAT on Refurbishments & Retrofits Living City Initiative extended and expanded to more regions Encourages renovation and urban regeneration projects

1. What Has Changed (and Why It Matters)

The 2026 Budget’s central goal is to accelerate housing delivery while promoting sustainable construction. To achieve this, the Department of Finance introduced several pivotal measures:

  • A 9% VAT rate on new apartment projects (build-to-rent and for-sale) effective July 2026 through 2030.

  • Full-year capital allowances for energy-efficient construction equipment and building improvements.

  • Continued €5 billion+ state investment in social and affordable housing under Housing for All.

For builders, this means lower indirect taxes on development projects and higher compliance pressure on cost tracking. Developers who align financial planning early will see stronger margins and smoother project approvals.

2. VAT Relief on New Apartments: How It Works

Starting July 2026, VAT on qualifying new apartment sales drops from 13.5% to 9% — a major boost to project viability. This reduced rate applies until 2030, offering a four-year planning horizon for developers.

Eligibility Criteria

  • The property must be part of a qualifying multi-unit development (not one-off builds).

  • Construction must have commenced after 1 July 2023 and be completed after July 2026.

  • Units must be sold for residential use only.

Worked Example – VAT Impact

Project Type Sales Price per Unit Old VAT (13.5%) New VAT (9%) Tax Saving per Unit
10-Unit Apartment Block €375,000 €45,562 €30,963 €14,599 (-32%)

For a 10-unit project, this reduction can enhance buyer affordability while preserving developer margins.

Cashflow Note: Reduced output VAT changes input VAT recovery timing. Builders must reconcile reduced-rate outputs with standard-rated inputs to prevent over- or under-claiming credits.

Action Step: Work with your accountant to reconfigure VAT codes in cost systems before July 2026, and simulate impact on each project’s cashflow.

3. Capital Deductions and Project Investment Planning

Budget 2026 extends the Accelerated Capital Allowance (ACA) for energy-efficient assets through 2030, allowing 100% write-offs in Year 1.

This measure helps developers and contractors:

  • Deduct qualifying capex immediately.

  • Reduce taxable profit in the same year.

  • Free up cash for expansion or loan repayment.

Eligible Assets Include

  • Construction plant and machinery.

  • Energy-efficient HVAC, heating, and lighting systems.

  • Solar panels, EV chargers, and green infrastructure.

  • Refurbishments meeting SEAI standards in commercial or mixed-use properties.

Worked Example – Capital Allowance Benefit

Investment Type Capex Normal Allowance (8 yrs) Accelerated Allowance (1 yr) Tax Saving (12.5%)
Energy-Efficient Plant €250,000 €31,250 p.a. €250,000 (Year 1) €31,250 saved in Year 1

For construction firms, that’s €30,000+ immediate tax relief, improving liquidity during project build phases.

4. Carbon Tax and Energy Costs: Plan for Price Pressure

From May 2026, Ireland’s carbon tax rises to €71/t CO₂, raising diesel and heating oil costs by several cents per litre. Contractors with heavy plant fleets may see 3–4% higher energy costs.

Offset Strategies

  • Invest in fuel-efficient or electric machinery (eligible for ACA).

  • Apply for SEAI energy grants to modernise site infrastructure.

  • Review subcontractor contracts to account for inflation-linked cost pass-throughs.

Tip: Include a carbon-cost index in tenders and budget reviews so multi-year projects (2026–2030) remain viable amid energy price volatility.

5. Housing & Retrofit Opportunities

The Government’s €5 billion housing fund sustains a strong pipeline of public-sector projects, while the Living City Initiative expansion supports urban regeneration.

Together, they create dual demand streams:

  • New construction — via Housing for All funding.

  • Refurbishment and retrofit — via extended tax incentives.

Example – Retrofit Tax Relief

A developer investing €300,000 to convert a listed property for housing can claim up to €90,000 in income tax relief over ten years — a substantial enhancement to ROI on renovation projects.

6. Why Cashflow Planning Is the Real Game Changer

Construction is capital-intensive and cash-sensitive. Even profitable firms can fail due to timing mismatches between outflows (wages, VAT, materials) and inflows (progress payments).

Key 2026 Cashflow Pressures

  • VAT rate changes alter refund and payment timing.

  • Auto-Enrolment pensions add 1.5% to labour costs from January 2026.

  • Rising fuel and material costs compress margins on fixed-price contracts.

Solution: Advanced Project Accounting

Amergin’s Project Accounting Service helps builders maintain control through:

  • Profitability tracking by project and stage.

  • VAT and tax modelling under new Budget 2026 rates.

  • Forecasting capital expenditure and payment cycles.

  • Implementing digital cost-control dashboards for real-time decisions.

Result: No site surprises — and no missed tax reliefs at year-end.

7. How Amergin Can Help Builders Plan 2026 and Beyond

At Amergin Consulting, we partner with Irish builders and developers to turn tax changes into strategic advantages.

Our Core Services

  • Project Accounting & Cashflow Planning – fully integrated with on-site operations.

  • Tax Relief & Capital Allowance Claims – ensuring every deduction under Budget 2026 is captured.

  • VAT Compliance for Construction – setup and reconciliation for the new 9% rate.

  • Financial Modelling & Forecasting – enabling confident negotiations with lenders and investors.

In short, we help you build projects that are financially sound, tax-efficient, and future-ready.

Conclusion: Make 2026 Your Strongest Build Year Yet

Budget 2026 is a rare alignment of policy and opportunity. Lower VAT, accelerated deductions, and robust housing investment all favour builders who plan ahead.

To capture these gains, developers must act now: reforecast cashflows, update capital plans, and integrate real-time accounting tools before new rules take effect.

At Amergin, we believe financial discipline is as essential as structural integrity.
Let our experts help you turn Budget 2026 into your blueprint for sustainable growth — from first draw to final handover.

Book your free Budget 2026 Planning Session today to secure your roadmap for a profitable year.
Book a free consultation: https://calendly.com/amergin-group_free/30min

About Amergin Consulting Ltd.

Amergin Consulting Ltd. is a Dublin-based chartered accountancy and business advisory firm serving Ireland’s SMEs and growth companies across construction, technology, professional services, and renewable energy.
We specialise in Accounting, Payroll, Taxation, and CFO Services that help businesses build stronger foundations for profit and compliance.

Disclaimer

This article is for general informational purposes only and does not constitute financial or tax advice. While every effort has been made to ensure accuracy, Budget 2026 legislation may change upon enactment of the Finance Act 2025.
Builders and developers should seek professional advice tailored to their specific circumstances before acting on any points discussed.

Sources

  • Donohoe, P. – Budget 2026 Statement (Dept. of Finance)

  • ThinkBusiness.ie – Budget 2026: Key Points for Business Owner

  • Irish Times – R&D tax credit in Budget to rise from 30% to 35%

  • Reuters – Expansionary Irish 2026 budget targets investment

  • Amergin Consulting – Auto-Enrolment Guide for SME

  • Amergin Consulting – Outsourced CFO Blog (Quick Facts section)
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