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Living City Initiative (LCI)

  1. Overview
  2. LCI definitions
  3. Before you begin work on a residential property
  4. After you finish work on a residential property
  5. Conditions for claiming and use of the property
  6. Rented Residential Relief and Commercial Relief
  7. Owner-Occupier Residential Relief
  8. Claiming Owner-Occupier residential relief

Owner-Occupier Residential Relief

You can claim this relief for money you spend refurbishing or converting a property for use as your main residence.

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. There is no upper limit for the amount you spend.

You can claim this relief as a deduction from your total income. This deduction means that the portion of your income which is taxable at your highest rate of tax is reduced. The amount of relief you can claim at 40% or 20% depends on the amount of tax you paid at either rate.

You can claim this relief over a period of ten years. This ten-year period starts in the year you first use the property as your main residence after refurbishment or conversion. 

How the relief operates depends on when the property is first used after the refurbishment or conversion work has been completed. The first use of the property after refurbishment or conversion must be as your sole, or main, residence.

The property is first used, after refurbishment or conversion, as your main residence before 1 January 2023:

  • You can claim 10% of the qualifying costs as a deduction from your total income each year for ten years.
  • You may not be able to claim the full 10% in one year if your income is not high enough. In this case, you cannot carry forward the unused relief and it is lost. 

The property is first used, after refurbishment or conversion, as your main residence on, or after, 1 January 2023:

  • You can claim 15% of the qualifying costs as a deduction from your total income each year for six years. You can claim the final 10% of the qualifying costs in the seventh year.
  • You may not be able to claim the full amount in one year if your income is not high enough. In this case, you can carry forward the unused relief and claim it in another year within the ten-year period. 

Carrying forward unused relief:

  • You can only claim relief carried forward where the property is your main residence at some point during the year.
  • You must claim the unused relief carried forward in the first year your income is high enough.
  • You cannot carry forward relief due for a year unless the property is your main residence at some point during that year.
  • You may have unused relief at the end of the ten-year period.  If this is the case, you cannot carry the relief forward 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. Mary uses the house as her main residence while the work is being carried out.  All the work is carried out during 2022. Mary continues to use the house as her main residence after the work has been completed. She can claim a deduction of €3,200 from her total income each year for ten consecutive years starting in 2022.

    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%).

    If Mary is not able to claim the deduction in, for example, 2024, the relief for that year is lost.

  • Example 2

    Seán owns a house that is located in an SRA. He spends €32,000 refurbishing the house during 2023. Seán leaves the house vacant until January 2024 when he starts to use it as his main residence. He can claim a deduction of €4,800 from his total income each year for six consecutive years, starting in 2024. He can claim a deduction of €3,200 in the seventh year.

    Depending on the rate of tax Seán pays, this deduction may result in tax relief of up to €1,920 per year for the first six years (€4,800 @ 40%) and €1,280 (€3,200 @ 40%) in the seventh year. If Seán is unable to claim the deduction in, for example, 2025, he can carry it forward. The deduction carried forward is added to the deduction for 2026. The total deduction for 2026 is now €9,600. Depending on the rate of tax Seán pays, this deduction may result in tax relief of up to €3,840 (€9,600 @ 40%) in 2026.

Next: Claiming Owner-Occupier residential relief

Published: 18 May 2023 Print this page

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