Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

A new tax incentive was introduced in Finance Act 2022 for small-scale landlords who undertake retrofitting works while the tenant remains in situ, which has the aim of retaining small-scale landlords in the private rental sector as well as encouraging retrofitting of rental properties. This measure is provided for in section 97B of the Taxes Consolidation Act 1997. The provision is intended to provide for a deduction of certain retrofitting expenses incurred by landlords on rented residential properties in calculating their case V rental profits. The expenses that qualify for deduction are those in respect of which the landlord has received a home energy grant from the Sustainable Energy Authority of Ireland, SEAI. The expenses incurred must be in respect of the period 1 January 2023 to the end of December 2025. Furthermore, the maximum amount of tax deduction that can be claimed is the lesser of the qualifying expenditure incurred or €10,000, and a landlord is only entitled to claim the relief on a maximum of two of his or her rental properties.

As introduced in the Finance Act 2022, the conditions in order to qualify for the relief were that the landlord must have been tax compliant, be compliant with the Residential Tenancies Act 2004 and be registered with the RTB. Certain landlords are exempt from registering with the RTB because their properties fall under the Housing (Private Rented Dwellings) Act 1982 and were therefore unable to avail of the deduction for retrofitting expenditure. Section 24 of this finance Bill aims to correct this by amending section 97B to permit landlords of properties that fall under the Housing (Private Rented Dwellings) Act 1982 to avail of the deduction for retrofitting expenditure, subject to meeting all of the other relevant eligibility criteria.The deduction operates in the same manner as any other permitted rental deductions. However, unlike other rental expenses it will not be deducted for the year in which it is incurred. Instead, the deduction will be claimed against the rental income of the year following that in which the expense was incurred. For example, expenses incurred on retrofitting works in 2023 should be included in calculating rental profits for 2024 and may be claimed by a landlord on their income tax return for that year. As such, relief under this measure will be claimed for the first time in 2025, in respect of the 2024 tax year. Income tax returns for 2024 are not due until quarter 4 of 2025 and as such, Revenue has advised me that it is not currently possible to provide information on the take-up of the deduction for retrofitting expenditure but we will provide it to the Senator as soon as it becomes available.