Revenue Note for Guidance

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Revenue Note for Guidance

Chapter 11

Reliefs for lessors and owner-occupiers in respect of expenditure incurred on the provision of certain residential accommodation

Overview

This Chapter contains the codified legislation in relation to reliefs for lessors and owner-occupiers, in respect of expenditure incurred on the provision of certain residential accommodation under the current Urban Renewal Scheme, the Living over the Shop Scheme, the Rural Renewal Scheme, the Park and Ride Scheme, the Town Renewal Scheme, the Student Accommodation Scheme and the general countrywide scheme for the Refurbishment of Rented Residential Accommodation.

The Chapter includes a provision which deals with continuity issues arising from the codification of the legislation which dealt with these residential reliefs under the various schemes listed above.

It also contains a saving provision in relation to the legislation (repealed by section 24(3) of the Finance Act 2002) which governed residential reliefs under the Customs House Docks Area Scheme, the Temple Bar Area Scheme, the 1994 scheme for Designated Areas and Designated Streets, the Qualifying Resort Areas Scheme, and the Designated Islands Scheme. This saving provision preserves title to the relief for existing beneficiaries and Revenue’s right to withdraw relief in appropriate circumstances.

NB: In relation to schemes where a termination date of 31 July 2008 applies, any expenditure incurred in the year 2007 and in the period 1 January 2008 to 31 July 2008 must be reduced to 75 per cent and 50 per cent respectively of the expenditure attributable to the period involved before calculating any allowances due to lessors and owner-occupiers (see section 372AS for details).

The various sections in Chapter 11 are as follows:

  • Section 372AK is the interpretation section for the Chapter and contains definitions of various terms used in the Chapter.
  • Section 372AL sets out the qualifying period in relation to each scheme.
  • Section 372AM deals with the grant of certain certificates and the issue of certain guidelines. It also sets out the conditions which must be met in order that a house may be a special qualifying premises (countrywide refurbishment scheme for rented residential accommodation) or a qualifying premises (all other schemes).
  • Section 372AN sets out what constitutes eligible expenditure, in the case of lessors, for the purposes of the Chapter.
  • Section 372AO sets out the conditions which must be met in order that a lease may be a qualifying lease.
  • Section 372AP provides relief for lessors against rental income in respect of eligible expenditure incurred in relation to residential accommodation.
  • Section 372AQ sets out what constitutes qualifying expenditure, in the case of owner-occupiers, for the purposes of the Chapter.
  • Section 372AR provides relief against total income for owner-occupiers in respect of qualifying expenditure incurred in relation to their residential accommodation.
  • Section 372AS sets out the rules for determining whether expenditure is or is not incurred in the qualifying period. This section includes restrictions, to 75 per cent and 50 per cent respectively, where expenditure is incurred in the year 2007 and in the period 1 January 2008 to 31 July 2008. It also establishes the date expenditure is treated as incurred for relief purposes.
  • Section 372AU contains a saving provision in respect of relief due and the clawback of relief given, in relation to residential reliefs under a number of older schemes where the qualifying period has expired.

372AK Interpretation (Chapter 11)

Summary

This section is the interpretation section for the Chapter. Most of the definitions which appear in the section replicate the definitions which appeared previously in sections, dealing with residential accommodation, which were repealed by section 24(3) Finance Act 2002. These are however a small number of new definitions and some alterations to previous definitions in relation to the terms used etc.

Details

Definitions

“certificate of compliance” and “certificate of reasonable cost” are to be construed, respectively, in accordance with section 372AM.

“conversion expenditure” is to be construed in accordance with section 372AN.

“eligible expenditure” is to be construed in accordance with section 372AN. This is a new term in relation to expenditure incurred on the construction, conversion or refurbishment of rented residential accommodation.

“existing building” has the same meaning as in section 372A. This term is relevant only in relation to the Living over the Shop scheme.

“facade”, in relation to a house, means the exterior wall of the house which fronts on to a street.

“guidelines”, in relation to a house within the site of a qualifying park and ride facility, has the same meaning as in section 372U.

“house” includes any building or part of a building used or suitable for use as a dwelling and any outoffice, yard, garden or other land appurtenant to or usually enjoyed with that building or part of a building.

“lease”, “lessee” and “lessor” are linked back to the definitions of those terms in Chapter 8 of Part 4 which deals with the taxation of rental income. Thus, “lease” includes an agreement for a lease and any tenancy but does not include a mortgage. “Lessee” and “lessor” are to be construed accordingly and include successors in title.

“Minister”, except where the context otherwise requires, means the Minister for the Environment and Local Government.

“necessary construction” has the same meaning as in section 372A. This term is relevant only in relation to the Living over the Shop scheme. Any reference in the Chapter (other than in section 372AR(1)(a)) to construction applies, in the case of a house which fronts on to a qualifying street or is comprised in a building or part of a building which fronts on to a qualifying street, as if it were a reference to necessary construction. This is provided that the context does not require otherwise.

“premium” has the same meaning as in Chapter 8 of Part 4 which deals with the taxation of rental income. Thus, “premium” includes any like sum whether payable to an immediate or superior lessor or to a person connected with the immediate or superior lessor.

“qualifying expenditure” is to be construed in accordance with section 372AQ. This is, as before, the term used in relation to expenditure incurred on owner-occupied accommodation. It now, however, includes a reference to conversion expenditure.

“qualifying lease” is to be construed in accordance with section 372AO.

“qualifying period” is to be construed in accordance with section 372AL.

“qualifying park and ride facility” has the same meaning as in section 372U(1).

“qualifying premises” is to be construed in accordance with section 372AM.

“qualifying rural area” means any area described in Schedule 8A.

“qualifying street” means a street specified as a qualifying street under section 372BA.

“qualifying town area” means an area or areas specified as a qualifying area under section 372AB.

“qualifying urban area” means an area or areas specified as a qualifying area under section 372B.

“refurbishment” in relation to:

  • a building or a part of a building other than a special specified building, means the carrying out of any works of construction, reconstruction, repair or renewal, and the provision or improvement of water, sewerage or heating facilities, which is certified by the Minister in a certificate of reasonable cost or certificate of compliance which is granted under section 372AM.
  • in relation to a facade, means any work of construction, reconstruction, repair or renewal carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration of a facade, and
  • in relation to a special specified building, any works of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the building or for the purposes of compliance with the requirements of the Housing (Standards for Rented Houses) Regulations 1993 (S.I. No. 147 of 1993). This provision does not apply in relation to owner-occupied accommodation for the purposes of sections 372AQ and 372AR.

“refurbishment expenditure” is to be construed in accordance with section 372AN. The term “relevant expenditure” was previously used to describe this.

“relevant cost” has the same meaning as in section 372AP. This definition now incorporates situations involving conversion and refurbishment expenditure.

“relevant guidelines”, in relation to a house or building in a qualifying student accommodation area, means guidelines entitled “Guidelines on Residential Developments for 3rd Level Students” issued by the Minister for Education and Science in consultation with the Minister and with the consent of the Minister for Finance, or such other guidelines amending or replacing those guidelines issued in accordance with section 372AM(1)(c).

“relevant local authority” in relation to —

  • a qualifying urban area, means the county council or the city council or the borough council or the town council in whose functional area the area is situated, or the authorised company (within the meaning of section 3(1) of the Urban Renewal Act 1998) which prepared the integrated area plan for that area.
  • the construction of a house within the site of a qualifying park and ride facility has the same meaning as it has in section 372U(1) in relation to the construction or refurbishment of a park and ride facility or a qualifying premises within the meaning of section 372W.

“relevant period” has the meaning assigned to it in section 372AP.

“rent” has the same meaning as in Chapter 8 of Part 4.

“replacement building” has the same meaning as in section 372A. This term is relevant only in relation to the Living over the Shop scheme.

“special qualifying premises” is to construed in accordance with section 372AM and “special specified building” has the same meaning as in section 372AN(6). These are the terms which are now used in relation to the countrywide scheme for the refurbishment of rented residential accommodation.

“specified building” has the same meaning as in section 372AN(6).

“street” includes part of a street and the whole or part of any road, square, quay or lane.

“tax incentive area” means a qualifying urban area, a qualifying rural area, the site of a qualifying park and ride facility, a qualifying town area, or a qualifying student accommodation area.

“total floor area” means the total floor area of a house measured in the manner referred to in section 4(2)(b) of the Housing (Miscellaneous Provisions) Act 1979.

Relevant Date: Finance Act 2021