Section 23 - Urban renewal

B

BerProp

Registered User
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Looking at purchasing a secondhand Urban Renewal apartment with S23 relief. EA says approx €200k qualifying expenditure available for S23 relief. My query is: If I was to pay say €60k for it, can I avail of the full €200k relief or is it based on a percentage of the purchase price? Can't find anything definitive from Revenue on the matter.
 
Thanks Joe_90.

So there is definitely no way you can purchase a new or secondhand property and avail of S23 relief that was higher then the purchase price and any EA's that say different are completely wrong?
 
BerProp said:
So there is definitely no way you can purchase a new or secondhand property and avail of S23 relief that was higher then the purchase price and any EA's that say different are completely wrong?
Click to expand...

It would not make any sense whatsoever,if I buy a sec 23 for €100k in Longford and get €240k (price at top of the tiger)to write off against tax ?

The E/a really should know better,be careful with this guy,the section could be exhausted if property was bought more than 10 years ago.

Ask to see the Letter of Compliance issued by the Dept of the Environment and also a separate letter showing how the calculations for relief are arrived at.
It should show

Tax Relief= Purchase price x Construction cost/construction cost + site cost

Dont ask me to explain the above but without these two pieces of paper you will not be claiming any section 23 relief.
 
Knuttell said:
It would not make any sense whatsoever,if I buy a sec 23 for €100k in Longford and get €240k (price at top of the tiger)to write off against tax ?

The E/a really should know better,be careful with this guy,the section could be exhausted if property was bought more than 10 years ago.

Ask to see the Letter of Compliance issued by the Dept of the Environment and also a separate letter showing how the calculations for relief are arrived at.
It should show

Tax Relief= Purchase price x Construction cost/construction cost + site cost

Dont ask me to explain the above but without these two pieces of paper you will not be claiming any section 23 relief.
Click to expand...

I accept your points fully. But using the example of the fictional Longford property, and assume that it had €240k of S23 when bought by the previous owner in 2006. If it's re sold now, Revenue claw back all S23 reliefs claimed by the previous owner, so is there not a chance that the new purchaser is entitled to claim all the original S23 of €240k?
 
Knuttell said:
Have a good read of this.

Thanks. My last post crossed with this post, but reading the PDF it certainly looks like the new lower purchase price is the multiplier for working out the S23 available as you and Joe_90 said.
Click to expand...
 
This example seems to illustrate an example of your position...

A builder buys a derelict property for €100,000. He spends €60,000 directly on refurbishment
and €4,000 on marketing and selling the refurbished property. A delay in obtaining planning
permission results in him being unable to get all of the work done within the qualifying
period. Work to the value of €10,000 is carried out outside of the qualifying period. He sells
the refurbished property for €250,000 (VAT inclusive) to Mr. Nolan.
The qualifying expenditure according to the formula is as follows:
€250,000 X €50,000
€60,000 + €100,000 = €78,125
Mr. Nolan’s qualifying section 23 expenditure is €78,125
Example 2
Mr. Nolan was unexpectedly forced to sell the house in the previous example before it could
be used. He sold it to Mr. Hurley for €230,000. Mr. Hurley’s qualifying expenditure
according to the formula is as follows:
€230,000 X €50,000
€60,000 + €100,000 = €71,875
Mr. Hurley’s relief is €71,875 as it is lower than €78,125, which was the relief that would
have been due to Mr. Nolan. If Mr. Hurley had purchased the house for €260,000, the
qualifying expenditure according to the formula would have been €81,250. In this case, Mr.
Hurley’s relief would be limited to €78,125, i.e. the amount of Mr. Nolan’s relief.
Click to expand...
 
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