Taxes Consolidation Act, 1997 (Number 39 of 1997)
372AO Qualifying lease.
(1) In this section “market value”, in relation to a building, structure or house, means the price which the unencumbered fee simple of the building, structure or house would fetch if sold in the open market in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the building, structure or house, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the building, structure or house is constructed.
(2) Subject to subsection (4), a lease of a house is a qualifying lease for the purposes of this Chapter where the consideration for the grant of the lease consists—
(b) of payments of the kind mentioned in paragraph (a), together with a payment by means of a premium which—
(i) in the case of the construction of a house, does not exceed 10 per cent of the relevant cost of the house,
(ii) in the case of the conversion of a building into a house, does not exceed 10 per cent of the market value of the house at the time the conversion is completed, and
(iii) in the case of the refurbishment of a house—
(I) is payable on or subsequent to the date of the completion of the refurbishment to which the refurbishment expenditure relates or which, if payable before that date, is so payable by reason of or otherwise in connection with the carrying out of the refurbishment, and
(II) does not exceed 10 per cent of the market value of the house at the time of the completion of the refurbishment to which the refurbishment expenditure relates.
(3) For the purposes of subparagraph (ii) or (iii) of subsection (2)(b), as the case may be, where a house is a part of a building and is not saleable apart from the building of which it is a part, the market value of the house at the time the conversion is completed or, as the case may be, at the time of the completion of the refurbishment to which the refurbishment expenditure relates shall be taken to be an amount which bears to the market value of the building at that time the same proportion as the total floor area of the house bears to the total floor area of the building.
(4) A lease is not a qualifying lease for the purposes of this Chapter—
(a) if the terms of the lease contain any provision enabling the lessee or any other person, directly or indirectly, at any time to acquire any interest in the house to which the lease relates for a consideration less than that which might be expected to be given at that time for the acquisition of the interest if the negotiations for that acquisition were conducted in the open market at arm’s length,
(b) where the lease relates to a qualifying rural area, if the duration of the lease is for a period of less than 3 months, or
(c) where the lease relates to a qualifying student accommodation area, if the lease does not comply with the requirements of the relevant guidelines.
Inserted by FA02 sched2(1).