Revenue Note for Guidance

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Revenue Note for Guidance

372AN Eligible expenditure: lessors

Summary

This section sets out what constitutes “eligible expenditure” in the case of lessors. This term is a new global term which is used to describe expenditure on rented residential accommodation. The expenditure can be expenditure on the construction of a house or, in the case of the Living over the Shop Scheme, the necessary construction of a house. It also covers “conversion expenditure” and “refurbishment expenditure”. Both these terms are explained further in the section. They do not, however, apply in relation to a building which is within the site of a qualifying park and ride facility as only construction expenditure qualifies.

Details

Eligible expenditure

(1) Expenditure is eligible expenditure for the purposes of Chapter 11, in relation to rented residential accommodation, where it is expenditure incurred on:

  • the construction of a house, or in the case of the Living over the Shop Scheme where it must be on necessary construction,
  • conversion expenditure, or
  • refurbishment expenditure.

Conversion expenditure

(2) The term “conversion expenditure” applies only in relation to the Living over the Shop Scheme, the Urban Renewal Scheme, the Rural Renewal Scheme, the Town Renewal Scheme and the Student Accommodation Scheme. It means expenditure incurred on the conversion:

  • into a house of a building where before the conversion the building had not been in use as a dwelling. Conversion of a part of such a building will qualify under the Living over the Shop Scheme, the Urban Renewal Scheme and the Town Renewal Scheme.
  • into 2 or more houses of a building where before the conversion the building had not been in use as a dwelling or had been in use as a single dwelling. Again conversion of a part of such a building will qualify under the Living over the Shop Scheme, the Urban Renewal Scheme and the Town Renewal Scheme.

(3) Conversion expenditure also includes expenditure incurred on the carrying out of any works of construction, reconstruction, repair or renewal, and the provision or improvement of water, sewerage or heating facilities. In effect, it includes refurbishment type expenditure. However, it does 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 e.g. under the normal rules of Case V. Also expenditure attributable to any “non-residential unit” is to be excluded.

(4) Provision is made for the apportionment of conversion expenditure on a floor area basis, for the purposes of excluding expenditure attributable to any “non-residential unit”, where the expenditure is attributable to a building or a part of a building in general.

Refurbishment expenditure

(5)(a) The term “refurbishment expenditure” means expenditure, other than expenditure attributable to a “non-residential unit”, incurred on the refurbishment of:

  • a specified building, and in the case of a specified building which is wholly within a qualifying town area, the refurbishment of a facade, or
  • the refurbishment of a special specified building.

(5)(b) Apportionment of refurbishment expenditure is provided, for the purposes of excluding expenditure attributable to any “non-residential unit”, where the expenditure is attributable to a specified building or a special specified building in general.

Special specified building and specified building

(6) The terms “special specified building” and “specified building” which are applicable in the case of the refurbishment of rented residential accommodation are explained.

A “special specified building” means a building or part of a building in which both before and after the refurbishment there is one or more than one house. This term is the term used to describe buildings which may qualify under the Countrywide Refurbishment Scheme.

The term “specified building” applies only to buildings which are to be refurbished under the Living over the Shop Scheme, the Urban Renewal Scheme, the Rural Renewal Scheme, the Town Renewal Scheme and the Student Accommodation Scheme. A part of a building will also qualify under the Living over the Shop Scheme, the Urban Renewal Scheme and the Town Renewal Scheme.

In the case of the Rural Renewal Scheme and Town Renewal Scheme there must be one or more than one house both before and after the refurbishment. In the case of the Living over the Shop Scheme, the Urban Renewal Scheme and the Student Accommodation Scheme there must be 2 or more houses both before and after the refurbishment.

Site development

(7) References in this section to the construction of, conversion into, or refurbishment of, any premises are to include all normal site development costs. The provision, however, does not apply in the case of the Countrywide Refurbishment Scheme.

Relevant Date: Finance Act 2019