Section 23 tax clawback

[Pock]

Own a Section 23 property rented on and off since 2005 and have used allowances of 150k. Under financial pressure, property vacant with little prospect of tenant, mortgage in arrears and bank have refused request for interest only. Can't carry it any more. Bank threatening to sell, if this happens will it result in a claw back of tax allowances leaving me in a mess with Revenue - currently all tax affairs utd.

Has been suggested to me that if the Bank take the property and sell it the Bank would become liable for clawback and I would be unaffected revenue wise - doesn't seem right to me ?? Does the beneficiary of the tax relief become liable for tax clawback or would it transfer to Bank as is forced sale ?

Currently limping along trying to pay mortgage and biding my time until 2015 when ten yr period re clawback has expired.

 

[laois1]

Think the 10 year rule applies here. So you would be best to wait til 2015. Am sure an accountant will confirm this. Is there no chance of renting it out til then ?Would be best to wait I think.

 

[Joe_90]

Did you buy it new in 2005? Certainly the clawback will be raised on you if you sell it within the 10 year tax life. Seems very short sighted of the bank to be pushing a sale of that property. Are they pushing for the sale of other assets.

 

[Dermot]

As I understand you must keep it for 10 years from the date of the commencement of the first letting. It would appear that you have other rentals and I think you should get your Accountant to do a calculation on how much you would owe revenue in the event of a forced sale and get the accountants to put it on their headed notepaper and bring this to the bank. If you are forced to dispose prior to the 10 year term the revenue bill will be quite high and would probably create bigger problems for you and also the bank