What are tax reliefs?
Tax reliefs reduce the income on which you pay your tax. This can entitle you to a refund of tax you have paid.
The amount of relief you are entitled to depends on the rate of tax you pay so it’s wise to speak to an accountant if you’re unsure. Professional accountants are trained to help individuals and businesses in Ireland with their accounts and financial obligations to Revenue.
As a new company or Sole Trader, the last thing you want to do is under-delcare tax (check out our post on tax penalties in Ireland for more information). At the same time, you don’t want to pay too much. Understanding what tax reliefs and tax credits you can claim will help you reduce your tax liability at the end of the year.
There are a number of tax reliefs relating to the upkeep and refurbishment of property. Read our article to see if you could qualify.
The Living City Initiative
The Living City Initiative aims to bring more families, shops, and services back into ‘special regeneration areas’. This includes areas in the city centers of Dublin, Cork, Limerick, Galway, Waterford, and Kilkenny.
The Living City initiative allows owners of properties that were built before 1915 to claim tax relief on amounts over €5000 spent on their refurbishment or conversion.
Conditions vary, depending on whether you are refurbishing a property for residential or commercial use, and only work which takes place before the 31rst of December 2022 will qualify for relief.
For owner-occupied residential properties, you can claim 10% of the cost of refurbishment (over €5000) from your taxable income every year for 10 years.
For rented and commercial relief you can claim 15% of the qualifying costs for the first 6 years and 10% in year 7, with a maximum tax relief of €200,000.
Expenditure on approved buildings and gardens
You can reduce the amount of tax you pay if you own or occupy a building, garden, or object which is of substantial scientific, historical, architectural, or aesthetic interest. This interest will be decided by the Minister of Tourism, Culture, Arts, Gaeltacht, Sport, and Media.
The building or object must have reasonable public access unless it is being used for tourist accommodation.
Once approved, you can claim tax on the repair, maintenance, or restoration of the items. For more information, visit the Revenue website.
Home Renovation Incentive (HRI)
The Home Renovation Incentive (HRI) scheme is relief from Income Tax for homeowners, landlords, and local authority tenants. It can be claimed for repairs, renovations, and improvements made to your home or rental property before the 31rst of December 2018. The only exception to this is if planning permission was in place by December 31rst, 2018, in which case work carried out between January 1rst 2019, and March 31rst 2019 will qualify.
Note that claims can be made up to 4 years after the qualifying work was paid for so you may still be entitled to tax relief.
To qualify for the scheme you must:
- Pay tax under Pay As You Earn (PAYE) or self-assessment.
- Be up to date on your Local Property Tax (LPT)
- Have had the work in question carried out by a HRI qualifying contractor
The tax credits can be claimed on amounts spent on renovations between €4405 and €30,000 (before Value Added Tax is added). Note that if you’ve received a grant for the work carried out, the qualifying expenditure will be reduced by three times the grant amount.
Need help with accounting?
Understanding the different tax credits and reliefs can be a difficult concept to wrap your head around. This is especially true if you’re starting your own business in Ireland and your focus is on running the business as best you can. We have a guide on how to minimise tax liability, but if you would like to receive information on your specific situation please get in touch with our Client Services Team. We are always happy to talk to you about the services you need to get your business off to the right start!
Larissa is a Fellow Chartered Accountant (FCA) and is the CEO of Accountant Online, which specialises in company formation, company secretarial, annual accounting services, bookkeeping, tax, and payroll services for micro and small companies in Ireland and the UK.