97A Pre-letting expenditure in respect of vacant premises

Summary

Expenses incurred on a vacant residential premises prior to it being first let after a period of non-occupancy are authorised as a deduction against rental income from that premises.

The section applies to expenditure on a premises which has been vacant for at least 12 months and which is then let between the date of the passing of the Finance Act 2017 and 31 December 2024. The expenditure must have been incurred in the 12 months before it is let as a residential premises and the expenditure must be such as would be allowed against rental income if it had been incurred during the period of letting. The deduction allowed is capped at €€5,000 per vacant premises. If the person who incurs the expenditure ceases to let the property as a residential premises within 4 years of the first letting the deduction will be clawed-back in the year of cessation. Amounts allowed as a deduction under this section cannot also be allowed under another section of the Act.

Details

(1) The section contains a number of definitions including

“specified day” which means the day on or after the date of the passing of the Finance Act 2017 on which a vacant premises is first let as a residential premises after the end of the period during which it was not occupied;

“specified period” in relation to a vacant premises, means the period of 12 months ending on the day before the specified day;

“vacant premises” means any premises that is not occupied for the entire 12 months before the “specified day”;

(2) Subject to subsection (3) the section applies to expenditure incurred on a vacant premises by the person chargeable in respect of the rent on or before 31 December 2024.

(3) Where a person incurs expenditure on a vacant premises during the 12 months prior to first letting, and this expenditure would be authorised as a Case V deduction under section 97(2) if it had been incurred on or after the first day the premises was let, then it is authorised as a Case V deduction. The subsection applies notwithstanding the restrictions that would otherwise be imposed by section 105 and is subject to subsections (4) and (5).

(4) The deduction for pre-letting expenditure shall not exceed €€5,000 in respect of each vacant premises.

(5) Where the person who incurred the pre-letting expenditure has obtained a deduction under this section and ceases to let the premises as a residential premises within a period of 4 years from first letting then the deduction granted shall be clawed-back in the year of cessation by assessment as a deemed profit or gain under section 97(1).

(6) Expenditure allowed under this section may not also be allowed under any other section of the Acts.

Relevant Date: Finance Act 2021