03/10/2016

03/10/2016

Living City Initiative: Commercial Relief

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What is it?

The Living City Initiative is a tax incentive scheme designed to draw property investment towards the regeneration of properties in urban areas. The incentive is limited to specific "special regeneration areas" as noted below.

Where are the Special Regeneration Areas (SRAs)?

At present the Special Regeneration Areas are confined to larger cities, namely;
  • Dublin
  • Cork
  • Limerick
  • Galway
  • Waterford
  • Kilkenny
The respective local authorities for each area have published maps illustrating the boundaries of the areas where the incentive applies. These maps can be found on the individual websites of the relevant local authorities.

What type of relief is available?

Two types of tax relief available under the scheme 1) Residential Relief and 2) Commercial Relief. In our previous piece, we provided an overview of residential relief. For the purpose of this piece, we have summarised key points re commercial relief.

Commercial Relief – How does it work?

Tax relief for "qualifying expenditure" is granted in the by way of an accelerated capital allowance at a rate of 15% (years 1 to 6) and 10% (year 7). Any unused capital allowance unused can be carried forward against future income of the business. In the case of passive investors, unused capital allowances carried forward beyond the tax life of the building are immediately lost.

Commercial Relief – What does “Qualifying Expenditure” mean?

The Revenue have published a detailed paper outlining the allowable costs. You can find it here. We have included a brief overview of some of the key conditions below.
  • Expenditure must be at least 10% of the value of the property before the work starts
  • Expenditure must be for conversion/refurbishment of commercial/retail premises. “New builds” are not eligible.
  • Expenditure must be incurred within 5 years of the commencement of the scheme
  • Relief is capped level at €400k of qualifying expenditure

Commercial Relief - Other Factors

Revenue have published a detailed paper on conditions of the scheme. Interested parties seeking further details are encouraged to consider Revenue’s detailed guidelines at http://www.revenue.ie/en/tax/it/leaflets/living-city-initiative.html

What Questions Do You Have?

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