A friend of mine has made an offer on a second hand property which is 7 to 8 years old and has been rented out during this period and he intends to continue renting it.
The property originally cost €200k and had about €160K tax relief for the purpose of Sec 23 (Rural renewal scheme).
He expects to purchase this property for about €75k and he thinks that he will have the benefit of the €160k relief.
I differ with him on that and my understanding of it is that the current purchase price is entered into the formula for calculating the relief resulting in a much lower tax relief.
He tells me that his Accountant has advised him that whether he gave more or gave less than the original price for it would have no bearing on the existing tax relief.
I think he should get another financial opinion.
Having discussed it with him he has the correct understanding of all the other matters relative to the tax benefit
The property originally cost €200k and had about €160K tax relief for the purpose of Sec 23 (Rural renewal scheme).
He expects to purchase this property for about €75k and he thinks that he will have the benefit of the €160k relief.
I differ with him on that and my understanding of it is that the current purchase price is entered into the formula for calculating the relief resulting in a much lower tax relief.
He tells me that his Accountant has advised him that whether he gave more or gave less than the original price for it would have no bearing on the existing tax relief.
I think he should get another financial opinion.
Having discussed it with him he has the correct understanding of all the other matters relative to the tax benefit