Tax Relief – Living City Initiative

The Living City Initiative is a scheme of tax incentives aimed at regenerating parts of our cities around the country such as Dublin, Cork, Limerick, Galway, Waterford and Kilkenny. Maps identifying parts of the cities within the regeneration areas can be found on the Local Authority websites.

Qualifying Expenditure

Tax relief can be claimed for expenditure incurred on the conversion or refurbishment of both residential and commercial property. There are three types of relief available:

• Rented residential relief
• Commercial or retail relief
• Owner occupier residential relief

Qualifying period

This period is from the 5 May 2015 to 4 May 2020 for owner occupier residential relief and commercial relief and from 1 January 2017 to 4 May 2020 for rented residential relief.

Conditions – rented residential relief and commercial relief

• For rented residential relief the property must have been built prior to 1915, there is no such requirement for commercial relief
• The property must be located within a special regeneration area
• Expenditure of at least €5,000 must be incurred
• A Letter of Certification must be obtained from the Local Authority
• The expenditure must be incurred during the qualifying period
• After refurbishment/conversion works the property must be let on bona fide commercial terms

Conditions – owner occupier residential relief

• The property must have been originally built prior to 1915
• The property must be located within a special regeneration area
• Expenditure of at least €5,000 must be incurred
• A Letter of Certification must be obtained from the Local Authority
• The expenditure must be incurred during the qualifying period
• The owner occupier claimant must be the first party to occupy the property after works have been completed

How much expenditure can qualify for relief?

There is a limit of €200,000 relief which can be obtained for each project, although there is no limit as to the amount of expenditure that can be incurred on a project. Parties can claim relief against more than one project, but which relief is subject to the following overall limits which can be claimed:

• Individual – €400,000
• Investor Company trading from property – €1.6m
• Investor Company letting the property – €800,000

Period to write off qualifying expenditure

• Rented residential and commercial relief
  Tax relief can be claimed over a 7 year period by way of capital allowances. 15% relief can be claimed for each of the first 6 years and 10% for the seventh year.

• Owner occupier relief
  The relief can be claimed over a 10 year period, at a rate of 10% for each year.
  If a claimant sells a property within the 10 year period there is no clawback of the relief claimed, however the property ceases to be a qualifying property and no further relief can be obtained as it relates to first owner occupiers only.

Letter of Certification

• An application should be made to the Local Authority
• The Local Authority will issue an interim acknowledgement
• Once the works are completed a Letter of Certification will be issued
• The Local Authority will also send a copy of the Letter of Certification to the Revenue Commissioners

For further information on this topic, please contact Brendan Sharkey on bsharkey@reddycharlton.ie