Further to our previous Non Principal Private Residence (NPPR) update where the High Court ruled that that the NPPR was allowable as a rental deduction this was then appealed by Revenue and the appeal was upheld so the NPPR charge is NOT deductible against rental income.
The Local Government (Charges) Act 2009, as amended by the Local Government (Household Charge) Act 2011, introduced a €200 annual charge on NPPR, payable by the owners to the local authority in whose area the property concerned is located.
The NPPR charge applied for all years from 2009 to 2013 inclusive.
The position of the Revenue Commissioners has always been that the NPPR charge was not allowed as a deduction against rental profits for income tax purposes. This was based on Section 97(2)(b) TCA 1997 which provides for a deduction in respect of “any rate levied by a local authority”. It is Revenue’s position that the NPPR is not a “rate levied by a local authority”, and so it is not deductible in computing rental income. In August of last year, we reported how the High Court had ruled on this point and provided that the NPPR was allowable as a rental deduction.
However, the decision of the High Court was appealed by the Revenue Commissioners to the Court of Appeal. Before the outcome of the appeal was known Revenue provided a facility to allow landlords to file an on-line notification of their claim to deduct the payment from rental income. Such claims were retained by Revenue to be processed when the outcome of the Appeal was known.
Revenue’s appeal to the Court of Appeal has been upheld. Accordingly, the NPPR is not deductible against rental income. As there is no legal basis for the deduction, taxpayers who made a notification are not entitled to amend their returns to deduct the NPPR and these claims will now be closed. Taxpayers do not need to take any further action.
Please contact Róisín McDaid on 01 439 4200 if you have any further queries.
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