Finance Act, 1996
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Rented residential accommodation: deduction for expenditure on refurbishment. |
68.—(1) In this section— | |
“qualifying lease”, in relation to a house, means, subject to section 70 (1), a lease of the house the duration of which is not less than 12 months and the consideration for the grant of which consists— | ||
(a) solely of periodic payments all of which are, or fall to be treated as, amounts by way of rent for the purposes of Chapter VI of Part IV of the Income Tax Act, 1967 , or | ||
(b) of payments of the kind mentioned in paragraph (a) together with a payment by way of a premium— | ||
(i) which is payable on or subsequent to the date of the completion of the refurbishment to which the relevant 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) which does not exceed 10 per cent. of the market value of the house on the date of completion of the refurbishment to which the relevant expenditure relates: | ||
Provided that, in the case of a house which is part of a building and which is not saleable apart from the building of which it is a part, the market value of the house on that date shall, for the purposes of paragraph (b), be taken to be an amount which bears to the market value of the building on that date the same proportion as the total floor area of the house bears to the total floor area of the building; | ||
“qualifying premises” means, subject to subsections (2), (3) (b) and (4) of section 70 , a house— | ||
(a) which is used solely as a dwelling, | ||
(b) the total floor area of which— | ||
(i) is not less than 30 square metres and not more than 125 square metres in the case where the house is a separate self-contained flat or maisonette in a building of two or more storeys, or | ||
(ii) is not less than 35 square metres and not more than 125 square metres in any other case, | ||
(c) in respect of which there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of refurbishment in relation to the house to which the certificate relates is not less than the relevant expenditure actually incurred on such refurbishment, and | ||
(d) which, on the date of completion of the refurbishment to which the relevant expenditure relates, is let (or, if it is not let on that date, is, without having been used after that date, first let) in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (save for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease; | ||
“refurbishment”, in relation to a building, means either or both of the following, that is to say: | ||
(a) the carrying out of any works of construction, reconstruction, repair or renewal, and | ||
(b) the provision or improvement of water, sewerage or heating facilities, | ||
where the carrying out of such works, or the provision of such facilities, is certified by the Minister for the Environment, in any certificate of reasonable cost granted by that Minister in relation to any house contained in the building, to have been necessary for the purposes of ensuring the suitability as a dwelling of any house in the building and whether or not the number of houses in the building, or the shape or size of any such house, is altered in the course of such refurbishment; | ||
“relevant expenditure” means expenditure incurred on the refurbishment of a specified building, other than expenditure attributable to any part (hereafter in this section referred to as a “non-residential unit”) of the building which, upon completion of the refurbishment, is not a house; and, for the purposes of this definition, where expenditure is attributable to the specified building in general (and not directly to any particular house or non-residential unit comprised in the building upon completion of the refurbishment) such an amount of that expenditure shall be deemed to be attributable to a non-residential unit as bears to the whole of that expenditure the same proportion as the total floor area of the non-residential unit bears to the total floor area of the building; | ||
“relevant period”, in relation to a qualifying premises, means the period of 10 years beginning with the date of the completion of the refurbishment to which the relevant expenditure relates or, if the premises was not let under a qualifying lease on that date, the period of 10 years beginning with the date of the first such letting after the date of such completion; | ||
“specified building” means a building— | ||
(a) the site of which is on a designated island, | ||
(b) in which, prior to the refurbishment to which the relevant expenditure relates, there are one or more houses, and | ||
(c) which, upon completion of that refurbishment, contains (whether in addition to any non-residential unit or not) one or more houses. | ||
(2) Where a person, having made a claim in that behalf, proves to have incurred relevant expenditure in relation to a house which is a qualifying premises, such person shall be entitled, in computing for the purposes of subsection (4) of section 81 of the Income Tax Act, 1967 , the amount of a surplus or deficiency in respect of the rent from the said premises, to a deduction of so much (if any) of the expenditure as falls to be treated, under section 70 (5) or any of the provisions of this section, as having been incurred by such person in the qualifying period and all the provisions of Chapter VI of Part IV of the said Act shall apply as if the said deduction were a deduction authorised by the provisions of subsection (5) of the said section 81: | ||
Provided that, where any premium or other sum which is payable (directly or indirectly), on or subsequent to the date of the completion of the refurbishment to which the relevant 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), to or for the benefit of the lessor or to or for the benefit of any person connected with the lessor, or any part of such premium or sum, is not, or is not treated as, an amount by way of rent for the purposes of the said section 81, the relevant expenditure falling to be treated as having been incurred in the qualifying period in relation to the qualifying premises to which the qualifying lease relates shall be deemed, for the purposes of this subsection, to be reduced by the lesser of— | ||
(a) the amount of the said premium or sum or, as the case may be, the said part of such premium or sum, and | ||
(b) the amount which bears to the amount mentioned in paragraph (a) the same proportion as the amount of the relevant expenditure actually incurred in relation to the qualifying premises which falls to be treated under section 70 (5) as having been incurred in the qualifying period bears to the whole of the relevant expenditure incurred in relation to the qualifying premises. | ||
(3) Where a qualifying premises forms part of a building or is one of a number of buildings in a single development, or forms part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the relevant expenditure incurred on the said building or buildings for the purposes of determining the relevant expenditure incurred in relation to the qualifying premises. | ||
(4) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs: | ||
(a) the house ceases to be a qualifying premises, or | ||
(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises, | ||
then the person who, before the occurrence of the event, received or was entitled to receive a deduction under subsection (2) in respect of relevant expenditure incurred in relation to the qualifying premises shall be deemed to have received on the day before the day of the occurrence an amount by way of rent from the qualifying premises equal to the amount of the deduction. | ||
(5) Where the event mentioned in subsection (4) (b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the said house passes shall be treated, for the purposes of this section, as having incurred in the qualifying period an amount of relevant expenditure in relation to the said house equal to the amount of the relevant expenditure which, under section 70 (5) or any of the provisions of this section, apart from the proviso to subsection (2), the said lessor was treated as having incurred in the qualifying period in relation to the said house: | ||
Provided that, in the case of a person who purchases such a house, the amount so treated as having been incurred by such person shall not exceed— | ||
(a) the net price paid by such person on the sale, or | ||
(b) in case only a part of the relevant expenditure incurred in relation to the house falls to be treated, under section 70 (5), as having been incurred in the qualifying period, the amount which bears to the said net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house. | ||
(6) Where relevant expenditure is incurred in relation to a house and before the house is used subsequent to the incurring of that expenditure it is sold, the person who buys the house shall be treated, for the purposes of this section, as having incurred in the qualifying period relevant expenditure in relation to the house equal to— | ||
(a) the amount of such expenditure which falls to be treated under section 70 (5) as having been incurred in the qualifying period, or | ||
(b) (i) the net price paid by such person on the sale, or | ||
(ii) in case only a part of the relevant expenditure incurred in relation to the house falls to be treated, under section 70 (5), as having been incurred in the qualifying period, the amount which bears to the said net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house, | ||
whichever is the lower: | ||
Provided that, where the house is sold more than once before it is used subsequent to the incurring of the relevant expenditure in relation to the house, the provisions of this subsection shall have effect only in relation to the last of those sales. | ||
(7) This section shall not apply in the case of any refurbishment unless planning permission, in so far as it is required, in respect of the work carried out in the course of the refurbishment has been granted under the Local Government (Planning and Development) Acts, 1963 to 1993. | ||
(8) Expenditure to which a person is entitled to relief under this section shall not include any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts. | ||
(9) The provisions of section 70 shall have effect for the purposes of supplementing this section. |