Q I've looked this one up a few times and can't seem to find a definitive answer. I am hoping to build an extension on my house next year. How much if any of the cost can I write off against tax for a residential extension? Or is it only individual grants that are available? I had heard that the government was planning on cutting some of these benefits; is there a date for this?
Also, if the extension is for a home office for my business, can I write some off against my business’ income?
A The costs of the extension are not deductible against income. However, upon disposal, the costs would be considered enhancement expenditure which could be used to reduce a CGT liability that may arise. Please note that if the property qualifies for principle private residence (PPR) relief then it is likely that no CGT liability would arise, which means that a deduction for enhancement expenditure would not be required.
Should the extension be used for the purpose of your business, the expenditure would be considered capital in nature. Capital expenditure cannot be deducted against income of a business. Furthermore, if part of the premises included an office which was used exclusively for the purpose of a trade, business or profession, PPR relief may only partially apply upon disposal.
In respect of your query regarding grants, we have provided detail in relation to the home renovation incentive (HRI). Other grants may be available depending on your personal circumstances. The HRI scheme allows for tax relief by way of an income tax credit at 13.5 per cent of qualifying expenditure on repair, renovation or improvement works for qualifying homeowners and landlords carried out on a main home or rental property by qualifying contractors. The work must be carried out and paid for by December 31st, 2016, in order to qualify for the relief. If planning permission is required and in place by that date, works carried out and paid for by March 31st, 2017, will qualify.
To avail of the credit, qualifying expenditure must be more than €4,405 (before VAT). The maximum qualifying expenditure is €30,000 (before VAT). If a grant is received for the works carried out, the qualifying expenditure would be reduced by three times the amount of the grant.
Niamh Horgan is a tax manager at RSM, rsm.global/ireland
