372AR Relief for owner-occupiers

Summary

This section provides relief in respect of qualifying expenditure incurred by an individual in the qualifying period in relation to qualifying owner-occupied residential accommodation. The relief consists of an annual deduction from total income of an amount equal to:

• 5 per cent of the expenditure incurred in the case of the construction of a qualifying premises,
• 10 per cent of the expenditure, in the case of the necessary construction of a qualifying premises under the Living over the Shop scheme, or
• 10 per cent of the expenditure, in the case of the conversion into or the refurbishment of a qualifying premises.

The relief may be claimed for the tax year in which the expenditure is incurred and for any of the following 9 tax years provided that the dwelling is the sole or main residence of the individual.

The section provides for apportionment of expenditure where qualifying expenditure is incurred by 2 or more persons and applies certain provisions of section 372AP, in order to determine the amount of qualifying expenditure incurred in relation to a qualifying premises, and the amount of qualifying expenditure to be treated as incurred in the qualifying period. It also deals with the interaction of the relief with the short tax “year” 2001.

Section 372AS contains provisions which are necessary to supplement this section.

By virtue of the provisions of section 458, the general provisions relating to allowable deductions and reliefs contained in sections 458 to 460 apply for the purposes of the relief provided by this section.

Details

The relief

(1) Where an individual incurs qualifying expenditure in a year of assessment in respect of a qualifying premises, the individual is entitled to a deduction from his or her total income for that year and for any of the 9 subsequent years of assessment in which the qualifying premises is the only or main residence of the individual. The amount of the deduction is:

• 5 per cent of the expenditure, in the case of the construction of a qualifying premises,
• 10 per cent of the expenditure, in the case of the necessary construction of a qualifying premises which fronts on to a qualifying street or is comprised in a building or part of a building which fronts on to a qualifying street, or
• 10 per cent of the expenditure, in the case of the conversion into or the refurbishment of a qualifying premises.

Interaction of the relief with the short tax “year” 2001

(2) Provision is made that where the year of assessment 2001 is one of the years in which relief is due, then the reference in subsection (1) to “any of the 9 subsequent years of assessment” will be to “any of the 10 subsequent years of assessment”. Also the relief for the year of assessment 2001, as a percentage of expenditure, is to be “3.7 per cent” and “7.4 per cent” instead of “5 per cent” and “10 per cent” and the relief for the 10th year of assessment will be “1.3 per cent” and “2.6 per cent” instead of “5 per cent” and “10 per cent”, respectively.

Deduction available against income of spouse or civil partner

(3) Where an individual is assessed to tax under joint assessment then, unless separate assessment applies, the individual can claim the deduction under this section from his or her total income and the total income, if any, of his or her spouse or civil partner.

Expenditure to be incurred in the qualifying period

(4) Expenditure will qualify only in so far as it is treated under section 372AS(1) as having been incurred in the qualifying period.

Limit on deductible expenditure at a park and ride facility

(5) There is a limit on the amount of qualifying owner-occupier expenditure incurred on qualifying premises at a park and ride facility which is to qualify for a deduction under this section. Thus, a deduction will only be made provided that all qualifying owner-occupier expenditure under the section when aggregated with eligible expenditure, if any, on rented residential accommodation under section 372AP at the park and ride facility, does not exceed 25 per cent of total allowable or deductible expenditure at that facility. The onus to certify compliance with this requirement is placed on the relevant local authority.

Apportionment of expenditure and purchases of new unused premises

(6) Apportionment of expenditure is provided for where qualifying expenditure is incurred by 2 or more persons in relation to a qualifying premises.

(7) The provisions of subsections (6), (9) and (10) of section 372AP are applied for the purposes of this section, in order to determine the amount of qualifying expenditure incurred in relation to a qualifying premises, and the amount of qualifying expenditure to be treated as incurred in the qualifying period. These provisions deal with apportionment and with the calculation of allowable expenditure where a newly constructed, converted or refurbished house is purchased from the person (including a builder) who incurred the expenditure in relation to the house.

Provision against double claims

(8) Expenditure qualifying under this section may 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.

Need for planning permission

(9) Relief will not apply in the case of conversion or refurbishment unless planning permission, in so far as it is required, has been granted under the Local Government (Planning and Development) Acts 1963 to 1999 or the Planning and Development Act 2000.

Miscellaneous

(10) The provisions of section 372AS supplement this section.

Relevant Date: Finance Act 2019