Abolition of Capital Allowances for rental income

"Transitional arrangements provided for an extension of the deadline to 31 July 2008 for projects already in the pipeline where planning application conditions had been met. In addition, the amount of capital allowances available would be reduced to 75% in 2007 and 50% in 2008 "


Do you mean this bit? It actually doesn't make any sense as the tax returns for 2007 and 2008 would already have been made and presumable the capital allowances already deducted.

I am somewhat surprised that mortgage interest relief on investment properties has not been touched. But rents are going to come down due to

a) rental tax relief being abolished, - signaled in that document and
b) social welfare rent allowance being reduced, that's not signaled yet but I presume it will be part of the cuts to the social welfare budget.

Maybe they haven't touched it because
a) many people with investment properties are at the tip of throwing in the keys
b) when they withdrew it after Bacon it had the opposite affect to what was intended
 
Thanks for the reply Bronte,
I have no doubt at all that that the relief on mortgage interest relief (currently 75%) will eventually be abolised altogether. I fully agree with your view regarding people on the tip of throwing the keys of their investment properties back by the way. Two more bombshells waiting for them are
1. An increase in interest rates and
2. For those on interest only the change to capital and interest payments that will soon be required.

No what I'm referring to is below and in particular the second paragraph. Extract from pagfe 95 and 96 of the 4 year plan

"Given the structure of these schemes there are ongoing legacy costs as investors use their capital allowances. Those legacy costs will reduce with time as capital allowances are exhausted. The restriction of reliefs measure introduced in 2007 (and further enhanced in 2010) also curtails the ability of individuals to utilise these reliefs, thereby spreading the costs over a much longer period.
In current circumstances, it is no longer acceptable that measures abolished as far back as 2006 should continue to cost almost €400 million per annum. Accordingly, the Government is committed (in line with the Revised Programme for Government) to the phased abolition of these legacy reliefs over the period of the Plan."
 
Galwayboy said:
Accordingly, the Government is committed (in line with the Revised Programme for Government) to the phased abolition of these legacy reliefs over the period of the Plan."
Click to expand...

If you mean that bit I don't think it says anything at all.

My view of the Section 23's for what it's worth is that the 'relief' was a smokescreen to overinflate the price and so was pre built into the original purchase price and of no benefit whatsoever to the taxpayer. Except for, if I recall correctly, for those large landllords who needed capital allowances from other properties. Furthermore some of the other section(s) 50(?) were in ridiculous locations.
 
Ok, my believe is based on the fact that they seen to be moving that way having reduced the allowance from 100% to 75%. Also they have indicated that mortgage interest relief for principal private residences is been phased out, so I think or believe they will do the same for investment properties (over a number of years of course). As a matter of interest what are your views on the original question that I asked.
 
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