Living City Initiative (LCI)
Owner-Occupier residential relief
You can claim this relief if you are the owner and occupier of a qualifying residential property.
If you are a landlord, you cannot claim this relief on properties you have rented out. Landlords may be able to claim Rented Residential Relief.
If you are a property developer, you may carry out refurbishment or conversion work under this scheme. You may then sell the residence to a person who can then claim relief as an Owner-Occupier.
You cannot claim for money spent on an extension unless:
- the extension was built before 1915
- you are required to add a feature such as a bathroom, to a derelict house due to building regulations.
You must spend at least €5,000 on refurbishing or converting a building to qualify. You can then claim 10% of the cost as a deduction from your total income each year for ten years. There is no upper limit for the amount you spend.
You may not be able to claim the full 10% relief in one year if your income is not high enough. In this case, you cannot carry forward the unused relief and it is lost.
- Example 1
Mary owns a house that is located in a Special Regeneration Area (SRA). Mary spends €32,000 on refurbishing the house in the qualifying period. She can claim a deduction of €3,200 from her total income each year for ten consecutive years.
Depending on the rate of tax Mary pays, this €3,200 may result in relief of up to €1,280 per year (€3,200 @ 40%).
How much can you claim?
You can only claim relief on the amount you spend on work that you carry out during the qualifying period. You cannot claim for advance payments for materials or work that will not be carried out during the qualifying period.
You may buy a refurbished or converted property directly from a developer and then become the first person to live in the property. If so, you can claim the relief.
Your builder must tell you what percentage of the total cost is related to the refurbishment or conversion. This is in order to claim the correct amount of relief.
The builder will have to pass the Letter of Certification to you as proof that the house qualifies for tax relief under the scheme. You should be able to show that you have fulfilled all the relevant conditions and that you are allowed the relief.
- Example 2
A builder buys a derelict property for €75,000. He spends €25,000 on refurbishment (total cost €100,000). The fully refurbished property is sold for €150,000.
The builder spent 25% of his or her total costs on refurbishment. At the time of sale he or she tells you this percentage. This is then applied to the sale price and results in a total claim for relief of €37,500 (€150,000 x 25%). This is spread evenly over ten years (deduction of €3,750 per annum).
What costs are covered?
You can only claim relief on the direct costs of refurbishment and conversion. These costs include:
- building materials
- hire of equipment
- labour costs
- administrative overheads
- architects' and engineers' fees
- painting and decorating
- local authority fees to provide certain infrastructure and services that directly relate to the property.
You can claim the cost of the below items if they are installed during the refurbishment. They must also form part of the fabric of the building:
- bathroom suites
- fixed flooring
- light fittings
- fitted kitchens (excluding appliances).
You cannot claim relief on legal fees, other professional fees or stamp duty paid. If you buy either a:
- converted property.
You can only include the Value-Added Tax (VAT) you have paid as part of the qualifying costs. Any VAT element already claimed cannot be claimed for this relief. If you complete the refurbishment or conversion work yourself, you cannot reclaim any VAT paid.
Next: Rented residential relief and commercial relief