Q on accessing section 23 relief

H

Helen

Registered User
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Hi,
We are considering buying a section 23 holiday home, although it would be for personal use rather than for letting out. We have another investment property which we were hoping to offset the relief against, but I've seen something on the revenue website that suggests you can't avail of the section 23 relief if the section 23 property is not rented out.
Has anyone any more expertise on this?
Thanks
 
You should note that the renowned Dublin tax consultant Frank Brennan said in last Thursday's Irish Independent that Section 23 investments are now a waste of time and money for almost all investors and that what he termed "sophisticated investors" had stopped acquiring them some years ago.
 
Thanks. Section 23 is not the motivation for acquiring the property, it is being acquired for the location and for personal use. However, we are just trying to figure out if we can use the relief on another investment property.
 
To my knowledge, in order to avail of section 23 type relief, the property must be rented out on long term leases. 'Long term' in this context means a minimum of three months - in other words it cannot be used for holiday lets. Furthermore, if you were to use the property for personal use, you would not be entitled to section 23 relief.
 
Section 23 Relief is split into two types really, Investment or Owner Occupier and the way that these reliefs are applied are somewhat different. The type of Relief is deemed at outset (first occupancy) and cannot be switched. In your case it would obviously be great if the premises was Owner Occupier Relief. Check this out with the agents, they should know.
 
San Martino said:
To my knowledge, in order to avail of section 23 type relief, the property must be rented out on long term leases. 'Long term' in this context means a minimum of three months - in other words it cannot be used for holiday lets.
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I believe there is a section property relief specifically aimed at holiday rentals - i would assume that this would cover short term lets... waiting to hear more info on this as well.
 
yankinlk said:
I believe there is a section property relief specifically aimed at holiday rentals - i would assume that this would cover short term lets... waiting to hear more info on this as well.
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This is called Section 48 Holiday Homes
 
This place is on a golf course in the grounds of a hotel. Just as people don't stay in a hotel for 3 months at a time, I wouldn't have thought it was intended for them to rent the houses for 3 months. There must be something that covers this kind of rental under section 23.
Another source has told me the property must be available for rent from April to Sept each year. I'm just wondering what documentation you need to prove it was rented. If we rented to relatives for a nominal fee, would this count?
 
If you are aiming at the short term rental market then in order to be allowable for tax purposes it must be registered with Bord Failte and meet their standards etc. I'm not sure how the registration process works but as far as I know you must opt for section 23 (longer term rentals) or holiday home lets, you cannot 'mix and match' these reliefs. Most rural tax properties are eligible for both reliefs - you must choose which one you want. The above is my understanding of the legislation, but I am not an expert!
 
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