Owner-Occupiers of Residential Property

This article clarifies the entitlement of owner-occupiers to relief in respect of conversion expenditure and the entitlement to relief in situations where qualifying properties are purchased from builders/developers.

General

Relief to individuals in respect of construction or refurbishment expenditure incurred on owner-occupied dwellings in Urban Renewal areas is provided in Section 349 Taxes Consolidation Act 1997 formerly [Section 46 Finance Act 1994]. Similar relief in respect of property in the Customs House Docks Area, Temple Bar Area, Dublin Docklands Area and on Designated Islands is provided for in other Finance Acts.

To qualify for relief, the property involved must be first used, after the construction or refurbishment expenditure has been incurred, by the individual who incurred the expenditure as his/her only or main residence. Relief is not available to a subsequent owner of the property.

The relief applies for the year of assessment in which the expenditure is incurred and for each of the nine subsequent years, provided the property is the only or main residence of the individual in the year of claim. The amounts which may be claimed are:

• Construction costs 5% per annum (Total = 50%)
• Refurbishment costs 10% per annum (Total = 100%)

Conversion expenditure

While conversion expenditure is not specifically mentioned in the sections which deal with owner-occupier relief Revenue accept that such expenditure may be regarded as refurbishment expenditure and relief will be granted accordingly.

Properties purchased by Owner-Occupiers from builders/developers

Section 349 Taxes Consolidation Act 1997 formerly [Section 46 Finance Act 1994] and the other sections which deal with owner-occupiers do not specifically cater for situations where newly constructed or refurbished (including converted) properties are purchased from builders/developers by owner-occupiers. Revenue accept that the first purchaser of such a building is entitled to claim owner-occupier relief where the property is used as that individual’s only or main residence.

In deciding the amount of the purchase price which qualifies for relief to owner-occupiers the same general rules as those which apply in relation to purchasers of rented residential accommodation will apply. In the case of the purchase of a newly constructed dwelling relief is allowed by reference to the amount of “the relevant price paid”. This amount is arrived at by using the following formula:

Relevant price:

where

B Net price paid

C Construction costs

D Site costs

In the case of conversion or refurbishment expenditure relief is confined to the lower of:

• The amount of conversion or refurbishment expenditure (as applicable), which was incurred in the qualifying period
  and
• The net price paid (or appropriate portion of the net price paid where part of the conversion or refurbishment expenditure is incurred outside of the qualifying period).

Grants or other payments received directly or indirectly from the State or out of public funds are deducted, in all cases, from the amount of expenditure which qualifies for relief.