Garden homes: property tax, insurance and your mortgage

Local Property Tax

Revenue's position, given in May 2026 in response to a query from the Institute of Professional Auctioneers and Valuers:

• A residential property for LPT is any building "in use as, or suitable for use as, a dwelling".
• A modular home in the garden that is permanently attached to the ground and suitable as a separate dwelling is liable in its own right. A structure not permanently attached to the ground is excluded.
• It needs its own LPT property ID and is valued independently of the main house.

LPT is charged in valuation bands; in 2026 the lowest band, for properties valued up to €240,000, is €95 a year. How a back-garden home will be valued, when it isn't sold separately, isn't settled, and valuers expect the site to matter more than the build cost.

Home insurance

• Tell your insurer before work starts. A new home on the property changes the risk, and building work may need cover.
• Make sure both buildings are covered for rebuild cost, and the contents in each.
• If someone other than you lives in it, or you let it, say so: many policies have conditions about lodgers and tenants.

Your mortgage

Many mortgage terms require you to tell the lender, or get consent, before significant building work or letting part of the property. Ask your lender before you build. A garden home can't be sold or mortgaged separately from the main house.

Value and selling

• A well-built garden home can add appeal for buyers with older parents or adult children, but it can't be sold on its own.
• Keep the notifications, commencement notice and registered completion certificate. A buyer's solicitor will ask for them. See selling a house with a garden home.

Rental income

A Class 3A garden home can be let, but not for short-term lets. Rent may be tax-free under rent a room relief up to €14,000 a year in 2026. See renting out a garden home.