Taxes Consolidation Act 1997 section 357

Rented residential accommodation: deduction for certain expenditure on conversion

Section 357 gives a lessor a deduction against rental income for expenditure incurred on converting a non-residential building (or a building in single dwelling use being split into two or more houses) into rented residential accommodation in a qualifying resort area.

• The relief applies where a building wholly within a qualifying resort area is converted into one house (where it was not previously a dwelling) or into two or more houses (where it was not a dwelling, or was a single dwelling).
• Qualifying conversion expenditure treated as incurred in the qualifying period is deductible in computing the rental surplus or deficiency from the converted premises.
• The converted unit must be used solely as a dwelling, satisfy floor area limits (30–125 sq m for a self-contained flat or maisonette in a building of two or more storeys, otherwise 35–125 sq m), hold a certificate of reasonable cost, and be first let in its entirety under a qualifying lease and continue to be so let throughout a 10-year relevant period.
• If the premises ceases to qualify or the lessor's interest passes during the relevant period, a clawback arises; planning permission for the conversion is mandatory.