Finance Act, 2001

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Interpretation (Part 11B).

380G.—In this Part—

‘house’ includes any building or part of a building used or suitable for use as a dwelling and any outoffice, yard, garden or other land appurtenant to or usually enjoyed with that building or part of a building;

‘lease’, ‘lessee’, ‘lessor’, ‘premium’ and ‘rent’ have the same meanings, respectively, as in Chapter 8 of Part 4;

‘market value’, in relation to a house, means the price which the unencumbered fee simple of the 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 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 house is constructed;

‘qualifying period’ means the period commencing on 6 April 2001;

‘refurbishment’, in relation to a house, means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the house or for the purposes of compliance with the requirements of the Housing (Standards for Rented Houses) Regulations, 1993 ( S.I. No. 147 of 1993 ).

Rented residential accommodation: deduction for certain expenditure on refurbishment.

380H.—(1) In this section and section 380I—

‘non-residential unit’ has the same meaning that it has in the definition of ‘relevant expenditure’;

‘qualifying lease’, in relation to a house, means, subject to section 380I(2), a lease of the house the consideration for the grant of which consists—

(a) solely of periodic payments all of which are or are to be treated as rent for the purposes of Chapter 8 of Part 4, or

(b) of payments of the kind mentioned in paragraph (a), together with a payment by means 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 and, in the case of a house which 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 on that date shall for the purposes of this subparagraph 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 subsection (3), to paragraph (a) and (b) of subsection (4) and to subsection (5) of section 380I, a house—

(a) which is used solely as a dwelling,

(b) which on the date of completion of the refurbishment to which the relevant expenditure relates is let (or, if 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 (except 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,

but excluding any house on which expenditure has been incurred, where that expenditure has qualified or would on due claim being made qualify for relief under any provision of Parts 10 or 11A;

‘relevant expenditure’ means, subject to section 380I(7), expenditure incurred on the refurbishment of a specified building, other than expenditure attributable to any part (in this section referred to as a ‘non-residential unit’) of the building which on 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 on 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 on 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 on the date of the first such letting after the date of such completion;

‘specified building’ means a building or part of a building—

(a) in which before the refurbishment to which the relevant expenditure relates there is one or more than one house, and

(b) which on completion of that refurbishment contains (whether in addition to any non-residential unit or not) one or more than one house.

(2) Subject to subsection (3), 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—

(a) such person shall, subject to paragraph (b), be entitled, in computing for the purposes of section 97(1) the amount of a surplus or deficiency in respect of the rent from the qualifying premises, to a deduction of so much (if any) of the expenditure as is to be treated under section 380I(6) or under this section as having been incurred by such person in the qualifying period,

(b) the deduction to which paragraph (a) refers shall be given for the chargeable period in which the expenditure is incurred or, if the premises was not let under a qualifying lease during that chargeable period, the chargeable period beginning on the date of the first such letting after the expenditure is incurred, and for any of the subsequent chargeable periods in which the qualifying premises in respect of which the person incurred the relevant expenditure continues to be a qualifying premises and the deduction shall be of an amount equal to 15 per cent of the expenditure to which paragraph (a) refers; but, the total amount to be deducted shall not exceed 100 per cent of that expenditure,

(c) where a chargeable period consists of a period less than one year in length, the amount of the deduction to which paragraph (b) refers shall not exceed such portion of the amount specified in that paragraph as bears to that amount the same proportion as the length of the chargeable period bears to a period of one year, and

(d) Chapter 8 of Part 4 shall apply as if the deduction referred to in paragraph (a) were a deduction authorised by section 97(2).

(3) (a) This subsection shall apply to any premium or other sum which—

(i) 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, and

(ii) is payable on or subsequent to the date of completion of the refurbishment to which the relevant expenditure relates or, if payable before that date, is so payable by reason of or otherwise in connection with the carrying out of the refurbishment.

(b) Where any premium or other sum to which this subsection applies, or any part of such premium or such other sum, is not or is not treated as rent for the purposes of section 97, the relevant expenditure 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 subsection (2) to be reduced by the lesser of—

(i) the amount of such premium or such other sum or, as the case may be, that part of such premium or such other sum, and

(ii) the amount which bears to the amount mentioned in subparagraph (i) the same proportion as the amount of the relevant expenditure actually incurred in relation to the qualifying premises, which is to be treated under section 380I(6) as having been incurred in the qualifying period bears to the whole of the relevant expenditure incurred in relation to the qualifying premises.

(4) Where a qualifying premises forms a part of a building or is one of a number of buildings in a single development, or forms a 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 that building or those buildings for the purposes of determining the relevant expenditure incurred in relation to the qualifying premises.

(5) 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 of the event an amount as rent from the qualifying premises equal to the amount of the deduction.

(6) Where the event mentioned in subsection (5)(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 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 house equal to the amount of the relevant expenditure which under section 380I(6) or under this section (apart from subsection (3)(b)) the lessor was treated as having incurred in the qualifying period in relation to the house; but, 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 purchase, or

(b) in case only a part of the relevant expenditure incurred in relation to the house is to be treated under section 380I(6) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house.

(7) 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 purchases 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 the lesser of—

(a) the amount of such expenditure which is to be treated under section 380I(6) as having been incurred in the qualifying period, and

(b) (i) the net price paid by such person on the purchase, or

(ii) in case only a part of the relevant expenditure incurred in relation to the house is to be treated under section 380I(6) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house;

but, 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, this subsection shall apply only in relation to the last of those sales.

(8) 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 1999, or the Planning and Development Act, 2000 .

(9) Expenditure in respect of 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.

(10) Section 380I shall apply for the purposes of supplementing this section.

Provisions supplementary to section 380H.

380I.—(1) A lease shall not be a qualifying lease for the purposes of section 380H 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.

(2) A house shall not be a qualifying premises for the purposes of section 380H if—

(a) (i) it is occupied as a dwelling by any person connected with the person entitled, in relation to the expenditure incurred on the refurbishment of the house, to a deduction under section 380H(2), and

(ii) the terms of the qualifying lease in relation to the house are not such as might have been expected to be included in the lease if the negotiations for the lease had been at arm's length,

or

(b) the lessor has not complied with all the requirements of the following Regulations—

(i) the Housing (Standards for Rented Houses) Regulations, 1993 ( S.I. No. 147 of 1993 ),

(ii) the Housing (Rent Books) Regulations, 1993 ( S.I. No. 146 of 1993 ), and

(iii) the Housing (Registration of Rented Houses) Regulations, 1996 ( S.I. No. 30 of 1996 ), as amended by the Housing (Registration of Rented Houses) (Amendment) Regulations, 2000 ( S.I. No. 12 of 2000 ).

(3) (a) A house shall not be a qualifying premises for the purposes of section 380H unless it complies with such conditions, if any, as may be determined by the Minister for the Environment and Local Government from time to time for the purposes of section 5 of the Housing (Miscellaneous Provisions) Act, 1979 , in relation to standards for improvements of houses and the provision of water, sewerage and other services in houses.

(b) A house shall not be a qualifying premises for the purposes of section 380H unless the house or, in a case where the house is one of a number of houses in a single development, the development of which it is a part complies with such guidelines as may from time to time be issued by the Minister for the Environment and Local Government, with the consent of the Minister for Finance, in relation to the refurbishment of houses as qualifying premises for the purposes of section 380H and, without prejudice to the generality of the foregoing, such guidelines may include provisions in relation to the refurbishment of houses, and the provision of ancillary facilities and amenities in relation to houses.

(4) A house shall not be a qualifying premises for the purposes of section 380H unless persons authorised in writing by the Minister for the Environment and Local Government for the purposes of that section are permitted to inspect the house at all reasonable times on production, if so requested by a person affected, of their authorisations.

(5) For the purposes of determining, in relation to any claim under section 380H(2), whether and to what extent expenditure incurred on the refurbishment of a qualifying premises is incurred or not incurred during the qualifying period, only such an amount of that expenditure as is properly attributable to work on the refurbishment of the premises actually carried out during the qualifying period shall be treated as having been incurred.

(6) For the purposes of section 380H, other than the purposes mentioned in subsection (5), relevant expenditure incurred in relation to the refurbishment of a qualifying premises shall be deemed to have been incurred on the date of the commencement of the relevant period, in relation to the premises, determined as respects the refurbishment to which the relevant expenditure relates.

(7) For the purposes of section 380H, expenditure shall not be regarded as incurred by a person in so far as it has been or is to be met, directly or indirectly, by the State, by any board established by statute or by any public or local authority.

(8) Section 555 shall apply as if a deduction under section 380H(2) were a capital allowance and as if any rent deemed to have been received by a person under section 380H(5) were a balancing charge.

(9) An appeal to the Appeal Commissioners shall lie on any question arising under this section or under section 380H (other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979 ) in the like manner as an appeal would lie against an assessment to income tax or corporation tax, and the provisions of the Tax Acts relating to appeals shall apply accordingly.

Provision against double relief.

380J.—Where relief is given by virtue of any provision of this Part in relation to expenditure incurred on any premises, relief shall not be given in respect of that expenditure under any other provision of the Tax Acts.”.