Capital Allowances for Registered Holiday Cottages

There appears to be some confusion about when a registered holiday cottage can qualify for capital allowances. The purpose of this article is to clarify that the registration of a holiday cottage with Fáilte Ireland by the return filing date for a particular chargeable period does not, in itself, confer an entitlement to industrial buildings writing-down allowances for that chargeable period unless certain other conditions have been met by the end of the chargeable period.

In general, industrial buildings writing-down allowances cannot be claimed for a chargeable period until the building is completed and in use as an industrial building. In the case of a registered holiday cottage, the building must also be registered with Fáilte Ireland. Revenue will allow a claim for a chargeable period where the registration process has not been completed by the end of that chargeable period but has been completed by the return filing date for the chargeable period provided that the cottage has been completed and is in use as a registered holiday cottage by the end of the chargeable period. To be regarded as being in use as a registered holiday cottage, the holiday cottage must be fully fitted out and be either let or be actively marketed as tourist accommodation with bookings being taken by the end of the chargeable period. The holiday cottage must continue to be registered throughout the period for which capital allowances are claimed.

Readers are also referred to Tax Briefing Issue 43 (page 38) to an article entitled “Resort Areas - Timing of claim for capital allowances”. The article deals with the availability of initial allowances for registered/listed properties under the Seaside Resort Scheme.