Revenue Note for Guidance

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Revenue Note for Guidance

372AAB Residential accommodation: allowance to owner-occupiers in respect of qualifying expenditure incurred on the conversion and refurbishment of relevant houses

Summary

This section is concerned with the owner-occupier residential element of the incentive scheme.

Details

Definitions

(1) “conversion” expenditure means expenditure incurred on the conversion —

  • into a house, of a building where immediately prior to the conversion the building had not been in use as a dwelling. Conversion of part of such a building will also qualify for relief under this section.
  • into 2 or more houses, of a building where immediately prior to the conversion the building had not been in use as a dwelling or had been is use as a single dwelling.
  • Again, conversion of part of such a building will qualify for relief under this section.

“letter of certification” is one which has been issued by the relevant local authority stating that:

  • planning permission, if required, has been granted,
  • the refurbishment/conversion work complies with such conditions, if any, provided for in section 5 of the Housing (Miscellaneous Provisions) Act 1979 in relation to standards of improvement of houses and the provision of water, sewerage and other services in houses, and
  • the expenditure incurred appears reasonable.

“qualifying expenditure” is expenditure incurred, in the qualifying period, by an individual, on the refurbishment or conversion of a relevant house, but excluding any State or public or local authority grants or payments received.

“qualifying premises” means a relevant house which meets certain conditions as follows:

  • it must be within a special regeneration area,
  • it must be used solely as a dwelling,
  • a letter of certification must have been issued by the local authority, and
  • it must be first used by the individual, following refurbishment or conversion, as his/her sole or main residence.

“relevant local authority” means the city council in whose functional area the special regeneration areas are situated.

The relief

(2) Where an individual incurs qualifying expenditure in a year of assessment in respect of a qualifying premises, the individual is entitled to a deduction from his or her total income for that year and for any of the 9 subsequent years of assessment in which the qualifying premises is the sole or main residence of the individual. The amount of the deduction is equal to 10% of the qualifying expenditure, per annum, for 10 years.

Information/Reporting System

(2A) Relief under this section cannot be claimed unless the following information is first provided to the Revenue Commissioners:

  • the name and PPSN of the individual making the claim. Claimants will always be individuals,
  • the address of the premises. This will be the principal private residence of the claimant since that is a key requirement for entitlement to the relief in the first place,
  • the property ID number, if any, of the residence (used in the context of Local Property Tax), and
  • details of the aggregate of all expenditure incurred on the conversion or refurbishment.

(2B) The information required under subsection (2A) is to be provided to the Revenue Commissioners by electronic means and through whatever electronic systems the Revenue Commissioners may make available.

Deduction available against income of spouse or civil partner

(3) Where an individual is assessed to tax under joint assessment then, unless separate treatment applies, the individual can claim the deduction under this section from his or her total income and the total income, if any, of his or her spouse or civil partner.

Expenditure incurred on work actually carried out

(4) Refurbishment or conversion expenditure will be treated as incurred in the qualifying period only to the extent that it is attributable to work actually carried out in the qualifying period.

Apportionment of expenditure and purchases of new unused premises

(5) Where two or more people have incurred qualifying expenditure on a property, the relief is apportioned among those persons according to the amount of the expenditure incurred by each person.

(6) The provisions of subsections (6), (9) and (10) of section 372AP, with any necessary modifications, are applied for the purposes of this section, in order to determine the amount of qualifying expenditure incurred, in relation to a qualifying premises, and the amount of qualifying expenditure to be treated as incurred in the qualifying period. These provisions deal with apportionment and with the calculation of allowable expenditure where a newly converted or refurbished house is purchased from the person (including a builder) who incurred the expenditure in relation to the house.

Provision against double relief

(7) Relief shall not be given in respect of capital expenditure incurred under any other provision of the Tax Acts where relief has been given by virtue of this section.

Date expenditure treated as incurred for relief purposes

(8) Expenditure incurred on the refurbishment or conversion of the property under this section is to be treated as incurred on the date on which the premises is first used as a dwelling after the expenditure is actually incurred.

Minimum spend

(9) Refurbishment or conversion expenditure incurred in the qualifying period must exceed €5,000 for relief under this section to apply.

Relevant Date: Finance Act 2021