I have recently purchased a residential property in the ROI. The property was previously vacant, and I have spent a significant amount of money in preparing the property for first letting. Is there tax relief available on this expenditure or is not allowed as pre-letting?
The Finance Act 207 introduced a new tax deduction for pre-letting expenses of a revenue nature incurred on a residential property, such as insurance, repairs and mortgage interest before the property is first let out. The pre-letting expenses are now given as a deduction against rental income from that property in the first year it is let out.
This tax deduction is to act as an incentive to owners of vacant residential properties. The conditions of the relief are as follows: The property in question must have been vacant for a period of at least 12 months prior to its first letting during the period 25 December 2017 and 31 December 2021. The expenditure must have been incurred in the 12 months before the property was let out and a cap of €5,000 per vacant property applies. There will be a clawback: Where the landlord ceases to let the property as residential premises or sells the property within 4 years of the first letting, this tax deduction will be clawed back in the year the property ceases to be let by the landlord.
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