Are the maintenance costs of my rental property deductible from housing tax?
My question concerns a rental property that has been vacated by tenants to temporarily accommodate a member of the owner’s family. Once the family member has vacated the property, are maintenance and repairs carried out before the relocation tax deductible?
While you’ve focused on the remanufacturing and related tax issues, you need to consider other compliance issues first.
In your request, you inform that the tenants have left the property “in order to temporarily accommodate a family member”. There are a few important points that you should have taken into account when taking this action. First, as a landlord you have rights and obligations to the tenant as conferred by landlord and tenant law and in accordance with any tenancy agreement you had in place. Some of the key pieces of legislation governing this relationship are as follows:
- Landlord and Tenant Laws 1967-1994
- Residential Tenancies Act 2004 (as amended in 2015/2016/2019/2020)
- Town Planning and Development and Residential Tenancies Act, 2020
- Housing Regulations 2019 (standards for rented houses)
As the owner, you must register the tenancy with the Residential Tenancies Commission (RTB) and update it with any changes to the tenancy. Since last year, you are also required to register the rental on an annual basis.
In addition, there are other obligations related to your request:
- Provide a Building Energy Rating (Ber) for the property when renting as well as maintaining the building structure and repairing the interior of the property.
- Provide your tenant with a rent book or a statement of rent paid.
- Reimburse tenants for repairs they make that are your responsibility.
- Insure the property (although tenants are required to insure their own property).
- Make sure the renter knows how to contact you or contact your rental agent.
- Observe rental review notice periods and follow the latest rules when conducting this process.
- Provide tenants with a valid written termination notice and follow the latest rules for terminating a tenancy.
This last point is particularly relevant. The type of lease the tenants were on dictates the actions you can take. For example, if they had a fixed-term tenancy, you couldn’t legally end the tenancy unless the tenants had defaulted on their obligations under the lease. If the rental was not a term rental, you, as the landlord, had the right to ask tenants to vacate the premises within the first six months without giving a reason.
If the tenant has been in situ for more than six months, they will have obtained security of tenure in accordance with Part 4 of the Residential Tenancies Act. In this situation, you can ask the tenant to vacate the property only under specific circumstances, one of which is if the owner or a family member intends to live in the property, which you indicate is. your situation. A member of the owner’s family is defined as a spouse, civil partner, child, stepson, foster child, grandchild, parent, grandparent, step-parent , a step-parent, a brother, a sister, a nephew, a niece or a person adopted by the owner under the laws on adoption. In addition, you should have provided a statutory affidavit containing specific details, including:
- The identity of the intended occupant
- Their relationship with the owner
- The expected duration of their occupation
The original copy (not a photocopy) of the statutory declaration must be served with the notice of termination; failure to do so would have invalidated the notice of termination.
You inform that the family member is now gone and that you are preparing to re-let the property. However, you should be aware that landlords must offer the property to the departing tenant, on the basis of a valid termination notice, if the property becomes available for rental again. Since June 4, 2019, the period during which an owner must return the property to the tenant has been extended from six to 12 months from the expiration of the notice period.
In terms of tax deductions, revenue.ie informs you that you cannot deduct the following expenses when calculating your profit or loss on rental property:
- Pre-rental fees, other than the property fees before the first rental of the property
- Post-rental costs
- Capital expenditures for property improvements, unless permitted under an incentive scheme
- Any cost for your own labor when carrying out repairs to the property
While article 97A of the Taxes Consolidation Act 1997 (TCA), inserted by the 2017 finance law, refers to certain residential pre-rental costs being tax deductible, it is based on the vacancy of the property for 12 month. You can get more details at iti.ms/33ahNyK
As with all aspects of taxation, it is important to consult your accountant, who will be fully informed of your personal situation and will be able to advise you as best as possible. – Enda McGuane
Enda McGuane is a Chartered Planning and Development Land Surveyor and a member of the Society of Chartered Surveyors Ireland, scsi.ie