Introduced as part of the Finance Bill last week, the Living City Initiative focuses on urban regeneration in Waterford and Limerick exclusively. The special tax provisions — which are dependent on EU State Aid approval and an an ex-ante cost benefit analysis — are designed to boost the lot of owner/occupiers rather than property developers. The incentives target small enterprises and retailers in particular, “to truly encourage a ‘Living’ city centre” with a large and diverse range of shops.
Deputy Deasy had been pressing Government ministers for these specific tax incentives to get money circulating in the local economy among businesses and tradespeople — especially in the heart of the city. He has since spoken with the Department of Finance about what will qualify in terms of Georgian architecture and the relevant buildings that can be included in the final order. The specific areas to be designated will be discussed with Waterford City Council.
He described the Bill’s provisions as “a tacit recognition of the difficulties Waterford City is facing in terms of urban decay and unemployment” — something he’s highlighted consistently over the past two years. “These targeted incentives are part of the required response, but are not a panacea in any sense,” he stressed.
Having again met with Department officials and Minister Michael Noonan, and others, in the past week, Deputy Deasy acknowledged “there will be changes in the detail of the tax incentives as part of the discussions with the European Commission. The Finance Bill has been written to allow flexibility and, while there are going to be fundamental restrictions, I’m hopeful that leeway will be given to have a real economic impact on Waterford.”
As to who will benefit, he explained: “In the case of a business, you will need to own and operate the business if you’re to avail of the tax reliefs, and you must be an owner/occupier to qualify for the residential aspect of the scheme.
“Also, it’s been made absolutely clear to me that the write-offs which will be included will only be related to income tax, and not any other kind of personal taxation such as property tax. This won’t be anything like the previous investor tax reliefs which were very lucrative for certain individuals but ultimately very damaging to the economy as a whole.
“This is a lengthy process and there are fundamental restrictions, but I think there is room to work with to maximise the impact this can have on the city,” Deputy Deasy concluded.
AS THINGS STAND
Retailers will be entitled to relief on works undertaken to upgrade or refit their shops. Accelerated Capital Allowances will be available to allow them to claim for refitting works, etc. over a 7-year period at a rate of 15% for the first 6 years and 10% for the final year.
Residents in qualifying Georgian houses will be able to claim tax relief for refurbishment costs at the rate of 10% per year for 10 years against their income. For instance, if the total costs amount to €25,000 the resident can claim €2,500 each year as a deduction for a period of 10 years — if it’s the principal private residence and not sold.