Revenue Note for Guidance

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Revenue Note for Guidance

372AM Grant of certain certificates and guidelines, qualifying and special qualifying premises

Summary

This section provided for the grant of certificates of compliance and certificates of reasonable cost by the Minister for the Environment and Local Government in relation to residential accommodation generally. It provides for the issue of guidelines in relation to rented residential accommodation in qualifying student accommodation areas.

The section also outlines the conditions which must be met in relation to a house in order that it may be:

  • a qualifying premises for the purposes of rented residential relief under section 372AP or owner-occupier relief under section 372AR, or
  • a special qualifying premises under section 372AP for the purposes of the countrywide scheme for the refurbishment of rented residential accommodation

These conditions include the minimum and maximum floor area of a house, terms in relation to its occupation and inspection, compliance with objectives of urban renewal and with various housing regulations.

Details

Certificates of compliance and certificates of reasonable cost

(1)(a) & (b) The grant of certificates of compliance and certificates of reasonable cost by the Minister for the Environment and Local Government in relation to residential accommodation is provided for in this section for the purposes of rented residential relief under section 372AP and owner-occupier relief under section 372AR. In both of these certificates the Minister certifies that:

  • the house involved complies in the case of construction, with section 4 of the Housing (Miscellaneous Provisions) Act 1979, and in the case of conversion or refurbishment, with section 5 of that Act.
  • the total floor area of that house is within the relevant floor area limits as specified in subsection (4), and
  • in the case of refurbishment, that the work was necessary to ensure the suitability of any house in the building or the part of the building as a dwelling and whether or not the number or the shape or size of houses in the building or the part of the building is altered in the course of such refurbishment.

In the case of a certificates of reasonable cost:

  • the Minister also certifies that the amount specified in the certificate in relation to the cost of construction, conversion or refurbishment of the house to which the certificate relates appears to the Minister to be reasonable,
  • section 18 of the Housing (Miscellaneous Provisions) Act 1979 applies, with any necessary modifications, as if it were a certificate of reasonable value within the meaning of that section.

In the case of a house within a qualifying town area, neither certificate may be granted unless an application has been received by the Minister within a period of one year from the day next after the end of the qualifying period. In the case of a house within a qualifying student accommodation area, any certificate granted must have regard to the relevant guidelines in relation to such accommodation.

Guidelines – qualifying student accommodation areas

(1)(c) The section provides for the issue of guidelines by the Minister for Education and Science, in relation to a house or building within a qualifying student accommodation area. That Minister has already issued “relevant guidelines” entitled “Guidelines on Residential Developments for 3rd Level Students”. This subsection provides that that Minister may amend or replace those guidelines in like manner to which he or she may issue guidelines. The subsection makes provision for the inclusion of a number of specific issues in the guidelines.

Qualifying premises – basic requirements

(2) Subject to other provisions of this section, a house will be a qualifying premises for the purposes of rented residential relief under section 372AP or owner-occupier relief under section 372AR where:

  • (2)(a) it fronts on to a qualifying street or is comprised in a building or part of a building which fronts on to a qualifying street, or its site is wholly within a tax incentive area,
  • (2)(b) it is used solely as a dwelling,
  • (2)(c) it complies with subsection (4) in respect of its total floor area,
  • (2)(d) there is in force in respect of the house either a certificate of compliance or, if it is not a house provided for sale, a certificate of reasonable cost. The amount specified in this latter certificate must be not less than the expenditure actually incurred on the construction, conversion or refurbishment of the house. These certificates are not required where only the refurbishment of a facade is involved.
  • (2)(e) in the case of a house wholly within the site of a qualifying park and ride facility, the relevant local authority issues a written certificate stating that the house or the development involved complies with the requirements laid down in the guidelines in relation to the development of residential accommodation at a park and ride facility, and
  • (2)(f) in so far as rented residential relief under section 372AP is concerned, the house is, in the case of construction, without having been used, first let in its entirety under a qualifying lease, or, in the case of conversion expenditure, without having been used subsequent to the incurring of that expenditure, is first let in its entirety under a qualifying lease, and in the case of refurbishment expenditure, on the date of completion of the refurbishment is let in its entirety under a qualifying lease (or is, without having been used after that date, so first let). This type of letting must continue throughout the remainder of the 10-year relevant period except for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another.
  • (3)(d) the house is not a house on which expenditure has been incurred which qualified or would qualify for relief under section 372AP on the basis that the house is a qualifying premises, or which qualified or would qualify for relief under any other provision of this Part. (i.e. Part 10).

Floor area requirements – qualifying premises

(4) A house is not a qualifying premises for the purposes of rented residential relief under section 372AP or owner-occupier relief under 372AR unless:

  • (4)(a) in the case of the Living over the Shop Scheme, the Urban Renewal Scheme and the Park and Ride Scheme, the total floor area of the house is not less than 38 square metres and not more than 125 square metres
  • (4)(b) in the case of the Rural Renewal Scheme, the total floor area of the house is not less than 38 square metres and
    • in relation to rented residential relief under section 372AP, it is not more than 175 square metres as respects eligible expenditure incurred on or after 6 December 2000 or, in relation to expenditure incurred before that date, it is not more than 140 square metres in the case of construction expenditure, and not more than 150 square metres in the case of conversion expenditure or refurbishment expenditure,
    • in relation to owner-occupier relief under section 372AR, it is not more than 210 square metres,
  • (4)(c) in the case of the Town Renewal Scheme, the total floor area of the house is not less than 38 square metres and
    • in relation to rented residential relief under section 372AP, it is not more than 125 square metres, unless the expenditure is conversion expenditure or refurbishment expenditure incurred on or after 6 April 2001 in which case it may be up to 150 square metres.
    • in relation to owner-occupier relief under section 372AR, it is not more than 125 square metres, unless the expenditure is expenditure on the conversion or refurbishment of the house which is incurred on or after 6 April 2001 in which case it may be up to 210 square metres.
  • (4)(d) in the case of the Student Accommodation Scheme, the total floor area of the house complies with the requirements of the relevant guidelines.

Other conditions – qualifying premises/special qualifying premises

Connected persons

(5) A house is not a qualifying premises or a special qualifying premises for the purposes of rented residential relief under section 372AP if it is occupied by any person connected with the person entitled to a deduction under that section in respect of the eligible expenditure incurred, and the terms of the qualifying lease involved are not on an arm’s length basis.

Compliance with urban renewal guidelines

(6) In the case of the Living over the Shop Scheme, the Urban Renewal Scheme and the Town Renewal Scheme, a house is not a qualifying premises for the purposes of rented residential relief under section 372AP or owner-occupier relief under 372AR unless the house or the development involved complies with guidelines issued by the Minister for the Environment and Local Government for the purposes of furthering urban renewal. The subsection makes provision for the inclusion of a number of specific issues in the guidelines.

Rural Renewal scheme – occupation as sole or main residence

(7) In the case of the Rural Renewal Scheme, a house is not a qualifying premises for the purposes of rented residential relief under section 372AP unless the house is used as the sole or main residence of the lessee throughout the period of any qualifying lease related to that house.

Living over the Shop scheme – location on upper floor(s) required

(8) In the case of the Living over the Shop Scheme, a house is not a qualifying premises the purposes of rented residential relief under section 372AP or owner-occupier relief under 372AR unless the house is comprised in the upper floor or floors of an existing building or a replacement building (see definitions in section 372AK) and the ground floor is in use for commercial purposes or it is subsequently used for commercial purposes where it is temporarily vacant.

Student accommodation area – letting to and occupation by students

(9) In the case of the Student Accommodation Scheme, a house is not a qualifying premises for the purposes of rented residential relief under section 372AP unless it is used for letting to and occupation by students in accordance with the relevant guidelines (see definition in section 372AK) throughout the 10-year relevant period.

Student accommodation – other conditions

(9A) A house, the site of which is wholly within a “qualifying student accommodation area” is not a qualifying premises or a special qualifying premises for the purposes of rented residential relief under section 372AP unless certain conditions are satisfied. The conditions are:

  • (9A)(a)(i) no person, other than the person (referred to as the “investor”) who incurred or, by virtue of subsection (8), (9) or (10) of section 372AP, is treated as having incurred “eligible expenditure” (defined in section 372AK) on or in relation to the house, must receive or be entitled to receive the rent or any part of the rent from the letting of the house during the “relevant period” (defined in section 372AK) in relation to the house. Essentially, this is 10-year period during which the house must continue to be owned and let by the investor.
  • (9A)(a)(ii) where two or more investors have incurred or, by virtue of subsection (8), (9) or (10) of section 372AP, are treated as having incurred the “eligible expenditure” on or in relation to the house, the rent received by each investor in such situations must be in the same proportion to the total rent as the expenditure incurred by each investor is to the total eligible expenditure incurred by all the investors.
  • (9A)(b) if a loan is used to fund the construction of, conversion into, refurbishment of, or, as the case may be, the purchase of, the house?
    • the loan must be obtained directly by the investor from a financial institution,
    • the investor must be personally responsible for the repayment of the loan, the payment of interest on the loan and any security that may be required in relation to the loan, and
    • there must be no arrangement or agreement, whether in writing or otherwise and whether or not known to the lender, whereby some other person agrees to be responsible for the obligations of the investor in relation to the loan.
  • (9A)(c) if, for any chargeable period (that is, a year of assessment in the case of income tax and an accounting period in the case of corporation tax) during the relevant period in relation to the house, the investor claims relief (against rental income) under section 97(2) for management or letting fees payable to a person in relation to the letting of the house?
    • such fees must be bona fide fees that reflect the level and extent of the services rendered by the person, and
    • the aggregate fees for the chargeable period must not be more than an amount equal to 15 per cent of the gross rent from the letting of the house for that chargeable period.

(9B) The above conditions apply—

  • as respects eligible expenditure incurred on or after 18 July 2002, unless a binding written contract for the construction of, conversion into or refurbishment of the house was in place before that date, and
  • where subsection (9) or (10) of section 372AP applies (that is, in the case of purchases), as respects expenditure incurred on or after 18 July 2002 on the purchase of a house unless a binding written contract for the purchase of the house was in place before that date.

(9C) However, paragraphs (a) and (c) of subsection (9A) will not apply as respects eligible expenditure incurred on or in relation to a house or, where subsection (9) or (10) of section 372AP applies, as respects expenditure incurred on the purchase of a house where, before 6 February 2003, Revenue have given an opinion in writing to the effect that the lease of the house between an investor and an educational institution referred to in the relevant guidelines, or a subsidiary (within the meaning of section 7 of the Companies Act 2014) of such an institution, would be a qualifying lease.

Special qualifying premises – compliance with Housing regulations and refurbishment guidelines

(10) In the case of the Countrywide Refurbishment Scheme, a house is not a special qualifying premises for the purposes of rented residential relief under section 372AP:

  • if the lessor has not complied with all the requirements of the Housing (Standards for Rented Houses) Regulations 1993 (S.I. No. 147 of 1993), the Housing (Rent Books) Regulations 1993 (S.I. No. 146 of 1993), and the Housing (Registration of Rented Houses) Regulations 1996 (S.I. No. 30 of 1996), as amended by the Housing (Registration of Rented Houses) (Amendment) Regulations 2000 (S.I. No. 12 of 2000).
  • unless the house or the development involved complies with guidelines issued by the Minister for the Environment and Local Government in relation to the refurbishment of houses as special qualifying premises. These guidelines may include provisions in relation to provision of ancillary facilities and amenities for houses.

Inspection by authorised persons

(11) A house is not a qualifying premises for the purposes of rented residential relief under section 372AP or owner-occupier relief under 372AR, or a special qualifying premises for the purposes of rented residential relief under section 372AP, unless any person authorised in writing by the Minister for the Environment and Local Government for the purposes of those sections is permitted to inspect the house at all reasonable times.

Relevant Date: Finance Act 2018