Section 23 was a tax incentive intorduced to help stimulate the redevelopment of certain parts of the country, it is based on the development costs ssociated with a project/property
The tax incentive part is relatively a simple procedure once the property is purchased, rented and held onto for more than 10 years
eg You purchase a property costing you €200,000
Qualifying amount is 85% (Development cost were €170,000)
On your tax return you are allowed to claim €170,000 as an expense against your rental income
This therefore means, for tax purposes only, you made a loss of €165,000 (assuming you had €5,000 taxable income from property) in the year
This means you will not pay tax on your rental income until you have recouped the remaining €1650,000 rental loss
Rental losses can be offset against other rental income from other properties but not against any other income, ie Self employed income or paye income
Stuart@buyingtolet.ie