Loss of rental shelter due to elimination of capital allowances

B

bigandy

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I'm hardly the only one in this position....just wondering what other peoples thoughts are...
I have income consisting of commercial rent and rent from a couple of houses. All of the gross rent goes towards repaying loans associated with the properties. Some years ago I bought into one of those Revenue approved schemes to acquire capital allowances to allow me to continue to shelter my rents so that I could pay off my loans.
Since Budget 2011, it seems that any allowances outstanding and unused by 31/12/2014 will now be forfeit.
This is not good for me, because it means I will become liable for tax on the rents which I won't be able to pay, and will be left having to decide whether to pay the lender or the taxman.
I am annoyed as I engaged in forward tax planning, invested in a Revenue approved scheme, and now the rules are being changed leaving me with a serious problem.
Questions:
Anyone else in a similar situation with thoughts on how to get out or minimise the effects ?
(selling the houses not great in the current market, and the business is a family business, and also not a great prospect for selling even if i wanted to)
Any thoughts on the feasibility of selling unused allowances on to someone else who could avail of them before the deadline ?
 
There have been a number of changes to the use of allowances/losses over the past number of years.

Budget 11 put in provisions to get rid of all losses/allowances but budget 12 exempted S23 allowances from the abolition. There is relief for capital allowances that were subject to the high income earners restriction and I imagine there will relief for anyone else.

With most landlords under pressure to pay back bank loans adding tax to that does not make much sense.
 
Thanks joe...found this from a review of finance act 2012

However, the Act introduces a number of measures with regards to the carrying forward of such capital allowances for “passive investors”. These new measure will not apply to a trade in which the individual is an active partner/trader.
The allowances that are impacted are as follows:

  • Allowances arising on certain industrial buildings (e.g. hotels, mental health centres, private hospitals, sports injury clinics etc),
  • Allowances arising on tourist infrastructure, childcare facilities and third level institutions etc. and,
  • Area based capital allowances (Temple Bar, Custom House Dock, Enterprise Area etc).
The restriction applies by basically applying a “guillotine” to the carry forward of unused capital allowances. No unused capital allowances can be carried forward beyond the tax life of a building. Where the tax life of a building has already ended, or is due to end before 31 December 2014, then any unused capital allowances can be brought forward for relief until 31 December 2014.


I wonder what is meant by a "passive investor" exactly ?
Sounds to me like I'm still for the "chop" after 2014.....
 
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