Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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427.To ask the Minister for Finance the cost of reducing the period in which pre-letting expenditure in respect of certain residential premises can be claimed from eight years to four years; and two years respectively. [33483/24]

Jack Chambers (Dublin West, Fianna Fail)
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Section 97A Taxes Consolidation Act 1997, introduced in Finance Act 2017, allows a deduction (capped at €10,000 per premises) from rental income for certain pre-letting expenditure on properties which have been vacant for at least six months and are subsequently let. To qualify, the expenditure must be incurred in the twelve months immediately prior to the letting.

Finance Act 2022 increased the maximum allowable deduction from €5,000 to €10,000 and decreased the vacancy period from 12 months to six months, in accordance with a commitment in the Housing for All Action Plan.

The purpose of the measure is to encourage owners of vacant residential property to bring that property into the rental market, for a minimum of four years. The expenditure must be such as would be allowed against rental income as if it had been incurred during the period of letting.

A deduction for pre-letting expenditure is currently claimed against rental income in a single tax year, at the start of the next period in which the property is let, rather than over eight years. The Deputy may be referring to capital allowances, which are deductions allowed for certain capital expenditure which can be claimed over eight years. Capital allowances cannot be claimed in respect of pre-letting expenditure.

Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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428.To ask the Minister for Finance the cost of reducing the period in which the deduction for retrofitting expenditure can be claimed to one year, subject to the rental premises remaining in the rental market for a period of two, five and ten years respectively. [33484/24]

Jack Chambers (Dublin West, Fianna Fail)
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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 attracting and retaining small-scale landlords in the private rental sector. This measure is provided for in section 97B Taxes Consolidation Act 1997.

The provision provides for a deduction for 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 the period 1 January 2023 to 31 December 2025. The maximum 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/her rental properties. A landlord is also required to keep the premises subject to a tenancy for two years after the end of the year in which the qualifying works are completed, otherwise the amount deducted will be clawed back.

Unlike other rental expenses, a deduction for retrofitting expenses is not claimable in the year in which it is incurred. Instead, the deduction is 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 the deduction for retro-fitting expenditure is already currently claimed against rental income in a single tax year, the first part of the Deputy's question does not arise.

In relation to the second part of the Deputy's question, and having regard to the fact that relief under this measure will be claimed for the first time in 2025 (when the income tax return for the 2024 tax year is filed), I am advised by Revenue that it would not be possible to project any change in costs from varying the period that the premises must remain on the rental market.