Date: 10 Nov 2022
New tax incentive to encourage small-scale landlords to undertake retrofitting works
The Minister for Finance, Paschal Donohoe, has announced that a new tax deduction for small-scale landlords who undertake retrofitting works while the tenant remains in situ which will be introduced at Committee Stage of the Finance Bill.
This measure will provide for a tax deduction of up to €10,000 per property, against Case V rental income, for certain retrofitting expenses incurred by the landlord on rented residential properties, for a maximum of two rental properties.
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). As such, the tax deduction is in addition to the SEAI grants, however, the tax deduction is conditional on the landlord having claimed an SEAI grant for the same retrofitting works.
Retrofitting works carried out and certified by the SEAI in year 1 can be claimed against Case V rental income in year 2. The scheme will run for 3 years. The property must remain as a rental property for a period of two years after the work has been carried out.
The landlord must also be tax compliant and registered with the Residential Tenancies Board.
The measure is in support of continued participation of small-scale landlords in the rental market, an objective being progressed through Housing for All, the government’s housing plan to 2030. Under Housing for All, the Department of Housing, Local Government and Heritage will undertake a review of the operation of the private rental sector and report on policy considerations ahead of Budget 2024.
Further details will be set out in the Finance Bill in due course.
Speaking today, Minister Donohoe said: “I am pleased to announce a new tax incentive for landlords who undertake retrofitting works while the tenant remains in situ. Landlords play an important role in the private rental sector and this measure is aimed at attracting and retaining small-scale landlords in that market. This new tax deduction is in addition to the SEAI’s grants and the combination of both measures offers substantial support to landlords to retrofit their rental properties. This will also assist in improving the quality and comfort of homes in the private rental sector and as such will be of benefit to individuals and families who are renting.”