Section 23

[hardmoney]

I recently bought an investment property that was Section 23. I have being told that there is over 120K in allowances still left. At the moment the Income is not covering the expences and therefore the property is not generating any rental Income.

I want to know if there is a time limit on how long your section 23 allowances last. If there is a time limit would the best option be to go interest only and take advantage of the tax free Income.

Your advice would be appreciated.

Thanks
J

 

[jfitzer]

No time frame on Allowance but you must retain the property for 10 year.

However, if I am reading your post correctly, you indicate that if you switched to interest only you would have a profit, which indicates that you are taking a deduction for the capital element of the loan. Only the interest element is allowed for this purpose. Additionally, at the very least you should have a PRSI liability after year 1, what it will be will be determained by your PRSI class, unless you have sufficient Capital Allowances (F&F) to write off without using the section relief.