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Write Off Expense to Develop Piece of Land

  • 13-04-2021 12:12pm
    #1
    thebiggestjim
    Registered Users, Registered Users 2 Posts: 345 ✭✭


    Hello All,

    Perhaps someone can offer a view on the following situation:

    I am thinking of developing a small piece of my property and rent it to a local business. Developing the land so that it is rentable will cost about EUR10k. This development funding will be paid for from after tax money from my day job.

    The question is will I be able to write off the first EUR10k in rental income against the expense of developing the land? So in essence no tax is due on the first EUR10k of rental income?

    If this is the case, does this have to happen in the same tax year or there is no time limit?

    I will consult a tax professional before I proceed with anything but it would be good to get a quick view of someone in the know.

    Thanks in advance.


Comments

  • #2
    Stratvs
    Registered Users, Registered Users 2 Posts: 958 ✭✭✭Stratvs


    https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-not-allowed.aspx

    Pre-letting expenses on rental property are excluded other than the exceptions listed.


  • #3
    thebiggestjim
    Registered Users, Registered Users 2 Posts: 345 ✭✭thebiggestjim


    Thanks for the info. Nice to see Revenue supporting investment.


  • #4
    ari101
    Registered Users, Registered Users 2 Posts: 2,835 ✭✭✭ari101


    thebiggestjim wrote: »
    Thanks for the info. Nice to see Revenue supporting investment.

    You might get to claim the cost as a deduction against a capital gain if you were to sell in future, as it sounds like enhancement of the asset.


  • #5
    duffysfarm
    Registered Users, Registered Users 2 Posts: 853 ✭✭✭duffysfarm


    you could consider renting the property as it is without spending the money renovating it but offering the tenant a rent free period if they were to develop it. eg the annual rent is €20k a year and you charge €10k for the first year.
    There will be drawbacks to doing it this way as the property may not be attractive to everyone but it is an option worth considering


  • #6
    thebiggestjim
    Registered Users, Registered Users 2 Posts: 345 ✭✭thebiggestjim


    duffysfarm wrote: »
    you could consider renting the property as it is without spending the money renovating it but offering the tenant a rent free period if they were to develop it. eg the annual rent is €20k a year and you charge €10k for the first year.
    There will be drawbacks to doing it this way as the property may not be attractive to everyone but it is an option worth considering

    Thanks for the suggestion. It is actually some land that needs some ground works and concrete poured to make it usable for renting so the work would need to happen before it is rented. Food for thought, maybe not all the work needs to happen before it is rented and your suggestion could partially work.

    Thanks.


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