Revenue Note for Guidance

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Revenue Note for Guidance


Living City Initiative


The “Living City Initiative” is a property incentive scheme for certain special urban regeneration areas, focusing on the conversion and refurbishment of dilapidated pre-1915 buildings for use as residential properties and also for the refurbishment and conversion of certain commercial properties. The urban areas have been described by order of the Minister for Finance for the purposes of these tax incentives. The scheme applies to qualifying expenditure incurred between 5 May 2015 and 31 December 2022 on owner-occupier residential property and commercial property and eligible expenditure incurred on rented residential property between 1 January 2017 and 31 December 2022. Provision is included to ensure that only expenditure properly attributable to works carried out within those periods will qualify for the relief.

There are three separate elements to this property incentive scheme. The first relates to owner-occupied residences, the second to retail and other commercial development and the third to rented residential property. There is a reporting system in place for both the residential and commercial elements of this incentive and information will, in all cases, be submitted electronically. No relief will be available unless certain basic information regarding investors, property locations and the amount of qualifying expenditure/eligible expenditure on each project is first made available to the Revenue Commissioners. This is to allow continual review of the Initiative to be undertaken, to see if commercial or residential projects are actually being undertaken, where they are and at what cost to the Exchequer.

Owner-Occupier Residential Relief

The details of this element of the scheme are as follows:

  • The relief is available in respect of expenditure incurred on the refurbishment or conversion of certain buildings, constructed before 1915 and referred to as relevant houses throughout this Chapter, at the rate of 10% per annum over 10 years provided the property remains the individual’s principal private residence (PPR) during that time. If the property is not the PPR of the person in any of the relevant years, then the relief is not available for that year.
  • Where a property is sold during that 10 year period there is no clawback of relief already given but no relief carries forward to the new owner.
  • The refurbishment or conversion expenditure may be incurred by the owner of the property, or the property may be purchased immediately after refurbishment or conversion has been completed. In the latter case, the cost is apportioned so that the relief only applies to the refurbishment or conversion costs and not to any element of the site cost.
  • Before the relief can apply, a letter of certification must be obtained from the relevant Local Authority stating that—
    • planning permission, insofar as it is required has been granted in respect of the work,
    • the work conforms to the relevant standards for construction and provision of water, sewerage and other services in houses, and
    • based on the information available at the time, the cost of the refurbishment or conversion seems reasonable.
  • Expenditure which qualifies for this relief cannot include expenditure which qualifies for any other relief or deduction.
  • In order for expenditure on refurbishment or conversion to qualify for this relief, it must exceed €5,000.

Accelerated Industrial Buildings Allowance

Capital allowances are available under this scheme in relation to the refurbishment or conversion of retail and other commercial premises and the refurbishment or conversion of rented residential property over a seven year period (15% per annum for years 1 to 6 and 10% in year 7). While rented residential property must have been constructed prior to 1915 there is no such requirement for commercial premises. The properties must be within the special regeneration areas and the commercial premises must be used for retail purposes or the provision of other services. The amount of the relief which can be obtained in respect of any refurbishment or conversion project is effectively capped at €200,000, regardless of how much expenditure is incurred or how many investors there are. The relief available is shared among the participants. This €200,000 limit is introduced so that the Initiative conforms to the EU de minimis rules for State Aid. Relief for the owner-occupier residential element is not limited since owner-occupier residences are not treated as undertakings for State aid purposes. Other details of the commercial and the rented residential elements of the scheme are as follows:

  • All of the normal capital allowance rules regarding writing down allowances, balancing allowances and charges apply,
  • The accelerated allowance may not be claimed by a property developer (as defined) or a person connected with one.
  • Expenditure which qualifies for relief under the scheme must be reduced by a multiple of 3 times any grant received or receivable, i directly or indirectly from or through the State or any of its agencies.
  • In order for relief to apply, the amount of expenditure incurred must exceed €5,000
  • Where relief is given under this measure, no relief is available in respect of the same expenditure under any other provisions of the Tax Acts.
  • This relief comes within the ambit of the termination of carry forward of certain losses (section 409F), and the restriction on high income individuals (section 485C).
  • The property relief surcharge (section 531AAE) applies to the commercial element of the scheme.

372AAA Interpretation (Chapter 13)


This section contains the definitions which are used in the Chapter.



relevant house” means a building, constructed before 1915.

market value” means, essentially, the price which the unencumbered fee simple of the building would fetch in an open market sale. However, that price is to be computed on a site-exclusive basis. Following FA 2016 this no longer has application.

PPS number” and “tax reference number” have the same meanings as in section 477B(1).

qualifying period” means the period starting from 5 May 2015 and ending on 31 December 2022.

refurbishment” is defined as any work 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.

special regeneration area” is defined as an area or areas specified as a special regeneration area by order of the Minister for Finance.

Relevant Date: Finance Act 2021