Finance Act, 1994
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Rented residential accommodation: deduction for expenditure on conversion. |
44.—(1) In this section— | |
“conversion expenditure” means, subject to subsection (2), expenditure incurred on— | ||
(a) the conversion into a house of a building— | ||
(i) the site of which is wholly within a designated area, or which fronts onto a designated street, and | ||
(ii) which has not been previously in use as a dwelling, | ||
and | ||
(b) the conversion into two or more houses of a building— | ||
(i) the site of which is wholly within a designated area, or which fronts onto a designated street, and | ||
(ii) which, prior to the conversion, had not been in use as a dwelling or had been in use as a single dwelling, | ||
and references in this section and section 47 to “conversion”, “conversion into a house” and “expenditure incurred on conversion” shall be construed accordingly; | ||
“qualifying lease”, in relation to a house, means, subject to section 47 (3), a lease of the house 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 which does not exceed 10 per cent. of the market value of the house at the time the conversion is completed: | ||
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 at the time the conversion is completed shall, for the purposes of paragraph (b), 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; | ||
“qualifying premises” means, subject to subsection (4), paragraphs (b) and (c) of subsection (5), and subsection (6), of section 47 , 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 conversion in relation to the house to which the certificate relates is not less than the expenditure actually incurred on such conversion, and | ||
(d) which, without having been used subsequent to the incurring of the expenditure on the conversion, is 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; | ||
“relevant period”, in relation to a qualifying premises, means the period of 10 years beginning with the date of the first letting of the premises under a qualifying lease. | ||
(2) For the purposes of this section, expenditure incurred on conversion of a building shall be deemed to include expenditure incurred, in the course of the conversion, on either or both the following, that is to say: | ||
(a) the carrying out of works of construction, reconstruction, repair or renewal, and | ||
(b) the provision or improvement of water, sewerage or heating facilities, | ||
in relation to the building or any outoffice appurtenant thereto or usually enjoyed therewith, but shall not be deemed to include— | ||
(i) any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts, or | ||
(ii) any expenditure attributable to any part (hereafter in this section referred to as a “non-residential unit”) of the building which, upon completion of the conversion, is not a house. | ||
(3) For the purposes of paragraph (ii) of subsection (2), where expenditure is attributable to a building in general and not directly to any particular house or non-residential unit comprised in the building upon completion of the conversion, then 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. | ||
(4) Where a person, having made a claim in that behalf, proves to have incurred conversion 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 47 (8) 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, under a qualifying lease, or otherwise under the terms subject to which the lease is granted, 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 conversion 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 conversion expenditure actually incurred in relation to the qualifying premises which falls to be treated under section 47 (8) as having been incurred in the qualifying period bears to the whole of the conversion expenditure incurred in relation to the qualifying premises. | ||
(5) 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 expenditure incurred on the conversion of the said building or buildings for the purposes of determining the conversion expenditure incurred in relation to the qualifying premises. | ||
(6) 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 (4) in respect of conversion 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. | ||
(7) Where the event mentioned in subsection (6) (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 conversion expenditure in relation to the said house equal to the amount of the conversion expenditure which, under section 47 (8) or any of the provisions of this section, apart from the proviso to subsection (4), 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 conversion expenditure incurred in relation to the house falls to be treated, under section 47 (8), 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 conversion expenditure incurred in relation to the house. | ||
(8) Where conversion 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 conversion expenditure in relation to the house equal to— | ||
(a) the amount of such expenditure which falls to be treated under section 47 (8) 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 conversion expenditure incurred in relation to the house falls to be treated, under section 47 (8), 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 conversion 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 conversion expenditure in relation to the house, the provisions of this subsection shall have effect only in relation to the last of those sales. | ||
(9) This section shall not apply in the case of a conversion unless planning permission in respect of the conversion has been granted under the Local Government (Planning and Development) Acts, 1963 to 1993. | ||
(10) The provisions of section 47 shall have effect for the purposes of supplementing this section. |