Special Property Allowances

Table of Contents

Hotel and Holiday Cottages

Capital allowances are granted for expenditure on hotels over 25 years at an annual 4% rate.

Formerly, hotels qualified for accelerated capital allowances over seven years. This is now available, only provided that a certificate is given by the tourism authority (Tourism Ireland) in relation to the expenditure, certifying that it qualifies as a small or medium-size enterprise, in accordance with the European Union state aid criteria or rules. The expenditure must fall into certain criteria under the regional aid guidelines permitted under EU state aid rules. Buildings must be registered under the Tourist Traffic Act.

After 4^th December 2002, new holiday cottages registered with the tourism authority are not deemed to be used in a hotel trade. The period was extended to 2006 for expenditures incurred on construction or refurbishment, provided the planning application was in place by a certain earlier dates, the latest of which was in 2004. The final qualification period ended on 31 July 2008.

A guesthouse or holiday hostel registered as such with the tourism authority, is deemed to be in use as a hotel and qualifies for a 4% per annum allowance. Holiday camps and camping site buildings may qualify, subject to qualification under state aid rules.

Nursing Homes

Qualifying nursing homes could claim writing down allowances as industrial buildings for capital expenditure incurred from 1998 until 2011. A qualifying residential unit is deemed to be used for the purpose of a trade for managing a nursing home. The Nursing home must be registered.. The allowance was granted over seven years at 15% for the first six years and 10% for the last year. The tax life was increased to 15 years after 1 February 2007. The qualifying period ended on 30 June 2011.

A qualifying residential unit is a house on or adjoining a nursing home or on its site, which is a single storey house or a residential building, compliant with building regulations which is designed to meet the needs of persons with disabilities which consist of one or two bedrooms, kitchen, a living room and includes a nurse call system linked to the registered nursing home. The qualifying period ended on 30 April 2010. The allowance was granted over seven years at 15% for the first six years and 10% of last year. The tax life increase to 15 years after 1 February 2007.

Each of the above units must be part of a development of not less than 10 residential units where the development comprises a day care centre and back up medical centre, the units must be managed and registered as a nursing home with an on-site caretaker and at least 20% must be available to persons eligible for rent subsidy by the HSE, and the rent must not exceed 90% of what would be charged if it was rented to a person not in receipt of a subsidy.

The units must be leased to persons who are certified by a medical doctor to require such accommodation by reason of old age or infirmity. Alternatively, the unit must be leased to a registered nursing home, who let it in this way.

Private Hospitals

Private convalescent homes facilities qualified for capital allowances during the same period on much the same basis. They must be registered in accordance with the nursing homes legislation. The qualifying period ended on 30 June 2011.

Capital expenditure on private hospitals incurred between late 2002 and 2013 on a building or structure used as a qualifying hospital, qualified for allowances.

The qualifying period ended on 31 December 2013.

A qualifying hospital is

a private hospital as defined in health insurance legislation;
can provide constant medical and surgical service;
has the capacity for outpatients and accommodation for at least 70 inpatient beds;
has day case / out-patients medical and surgical services of not less than 40 beds;
has operating theatres, therapeutic services, diagnostic services;
provides the facilities of at least five specialists services including A&E, cardiology, oncology, mental health services and paediatrics;
provides 20% of its capacity to public patients at a discount of 10%; and
receives annual certificates from HSE confirming compliance with the foregoing.

The hospital includes rooms used for assessment and treatment, but excludes consultant’s rooms and offices.

If (any relevant interest in the) property is held by any of the following, then capital allowances were not available under state aid restrictions

property developers,
companies,
trustees, individuals involved in the management of a hospital as director, employee or otherwise.

Capital allowances were allowed on the relevant expenditure at the annual rate of 15% for the first six years and 10% for the last year. Otherwise there is clawback in this period. The relevant period for clawback is increased to 15 years, if the building if first used after January 2007.

Sports Injuries Clinic

Capital allowances are available for sports injuries clinic for expenditures incurred before 2008. The qualifying period ended on 31 July 2008.. A qualifying sports injuries clinic is one whose main business is the provision of healthcare consisting of diagnosis, alleviation and treatment of sports related injuries. It must

have a capacity to provide day patient, inpatient and outpatient medical and surgical services of at least 20 beds;
contain an operating theatre; and
make 20% of its capacity available to the public patients with a discount of at least 10%.

This ongoing conditions must be certified annually by the HSE..

The above restrictions on the interest being held (and the allowances being accordingly claimed) by certain entities and person apply. If (any relevant interest in the) property is held then in the following, then capital allowances were not available under state aid restrictions

property developers,
companies,
trustees, individuals involved in the management of a hospital as director, employee or otherwise.

Capital allowances were allowed on the relevant expenditure at the annual rate of 15% for the first six years and 10% for the last year. There is a clawback if the building ceases to be so used within 10 years. The relief was phased out commencing in 2006.

Mental Health Centre

Qualifying mental health centres qualified for capital allowance in the period 2007 to 2011. The qualifying period ended on 30 June 2011. They were deemed industrial building. A 15-year period applies. The centre had to be

approved under the Mental Health Act,;
have a capacity for day patients and outpatient services with accommodation of at least 20 beds;
provide data to the HSE in relation to expenditure, nature of investors, amounts, together with other matters required to evaluate the costs of the allowance relative to the benefit.
receive reception public patients of a minimum quantity (20%), subject to a 10% price discount.

There are obligations to make annual undertakings to the Revenue. A HSE certificate of compliance is required annually for a period of 15 years.

The above restrictions on the interest being held (and the allowances being accordingly claimed) by certain entities and person apply if (any relevant interest in the) property is held then in the following, then capital allowances were not available under state aid restrictions

property developers,
companies,
trustees, individuals involved in the management of a hospital as director, employee or otherwise.

Capital allowances were allowed on the relevant expenditure at the annual rate of 15% for the first six years and 10% for the last year. The life of the drawback period is 15 years for balancing allowance/charge.

Most health sector capital allowances were terminated at the end of 2009. Expenditure incurred beyond that date, was permitted in limited circumstances where certain steps have been taken in the project by certain date. In these cases, the termination dates were postponed.

Palliative care units survived the 2009 Finance Act Reforms. Palliative care is active total care of patients suffering from progressive illnesses and diseases which are progressive and advanced, and are no longer curable by medical treatments. The conditions are much the same as those applicable to hospitals.

Third Level Education

Capital allowances were available for expenditure on third level education buildings until the end of 2006. The period ran from mid-1997 to tshe end of 2006 and in limited circumstances to end of July 2008. The period ran from mid-1997 to the end of 2006 and in limited circumstances to end of July 2008. They continued to be available for a period up to August 2008, provided that certain minimum milestones in the project had been undertaken by 31^st December 2006.

The expenditure was allowed on qualifying premises and on plant and machinery approved by the Minister for Education or Minister for Health. A qualifying premises was a building used for third level education including sporting or leisure activities provided by an approved institution. It must be let to an approved institution. The expenditure must be certified as complying with conditions. The qualifying period ended on 31 July 2008

The allowance provides for industrial buildings annual allowance of 15% for 6 years and 10% in the final year with a tax (clawback) life of seven years.

Childcare

Capital allowances were available on expenditure and construction of childcare facilities. This included their extension, conversion or refurbishment. The facilities must be certified under childcare legislation and meet the prescribed standards.

The building must be used as childcare facility for 10 years in order to avoid claw back. The period was increased to 15 years for first use after February 2007. The allowance was at the rate of 10% per year. It is available to owners and lessors/investors. After 1999, property developers and persons connected with them are not entitled to claim allowances.

The scheme terminated as on 1^st October 2010, unless certain key conditions had been met by that date in which event extension for ongoing projects was allowed. The scheme finally ended on 31 March 2012

Allowances under special schemes

Generally, industrial buildings expenditure is allowed over 25 years at an annual rate of 4%. In some cases, a greater percentage may be allowed earlier, as parts of a special al incentives, for example former designated disadvantages areas. There have been many such schemes, many of which are being or have been phased out, but may still be encountered, where a qualifying building is purchased before the end of the relevant write off period.

Certain class of expenditure such as those qualifying such as nursing homes, hotels and similar facilities are written off over for seven years at 15% per annum at 10% in the last year. Numerous such facilities have been financed by investors on lease back arrangements that share the value of the allowances between the operator and investors.

Successors

There are rules in relation to the allowances granted to purchasers of buildings, who have not themselves incurred the construction expenditure. Purchasers may qualify for allowances based on proportionate part of the purchase price. This is based on the construction costs as a percentage of construction cost plus site cost. It need not be the actual cost to the developer. This applies to a first sale before first use or within one year of the construction.

On subsequent sales within the write off period, the allowances are based on the lower of part of the price paid by the purchaser or the actual allowance originally available. The part of the price is the proportion referable to actual construction costs / construction cost plus cost of land. This is allowed over the balance of the write off period.