ASSOCIATE WITH Taxes Consolidation Act 1997 s353

Qualifying Resort Areas - Listed Self-Catering Accommodation

Tax relief in the form of capital allowances is available for, inter alia, certain tourist accommodation facilities under the Resort Areas Incentive Scheme. Depending on the type of tourist accommodation facilities involved, they can be either -

• registered by Fáilte Ireland (Part III of the Tourist Traffic Act, 1939), or
• listed by Fáilte Ireland (Section 9 of the Tourist Traffic Act, 1957).

This article deals with listed self-catering accommodation, such as holiday cottages or apartments.

For the purposes of the Resort Areas Scheme, the Tax Acts require self-catering accommodation to have met certain conditions before capital allowances can be claimed. These conditions include being listed by Fáilte Ireland for an 11- year period following the first use of the accommodation. A premises must be listed for each of the 11 years for which capital allowances are claimed.

To qualify for listing, self-catering accommodation must meet the following conditions:

• The premises must be used primarily for letting to, and occupation by, tourists and must not be used for any other purpose in the period 1 April to 31 October in each year.
• The premises must not be let to, or occupied by, any person for more than 2 consecutive months at any one time or for more than six months in any year.
• A register of lessees/tenants must be maintained that must contain the following information in relation to each lessee/tenant:
  • name, permanent address and nationality
  • date of arrival and date of departure.

Revenue understands that the inspection and approval of self-catering accommodation for listing purposes is being phased out by Fáilte Ireland. Therefore, the listing condition may no longer be met by operators of such accommodation.

In view of the Fáilte Ireland decision to phase out the listing of self-catering accommodation, Revenue is prepared to accept that the listing requirement in the tax legislation is satisfied provided that the above conditions continue to be met. These conditions will have to be met for each year for which capital allowances are being claimed. Claimants must be able to show that the above conditions have been met, as they may be required to do so in the case of a Revenue audit.

As the latest date by which qualifying expenditure on construction or refurbishment work under the Resorts Area Incentive Scheme must have been incurred was 31 December 1999, Revenue expects that all qualifying premises under the scheme would already have been listed by Fáilte Ireland and that there will be no new entrants to the scheme at this stage.

Because of the 11-year holding period, some owners of self-catering accommodation will continue to be in a position to avail of capital allowances for several years. Where a person disposes of a qualifying premises during the 11- year period, a new owner can only claim the allowances over the remainder of the tax life of the building, i.e. 25 years less the period for which the original owner used the premises. Again, entitlement to capital allowances will depend on the conditions listed above being met throughout the remainder of that 25-year period.

It should be noted that this article only applies to listed self-catering accommodation under the Resort Areas scheme. Registered tourist accommodation is unaffected.