Section 23

[Lemurz]

Can't seem to find any thread on Section 23 relief.

Can somebody provide a link with basic information of how the whole process works?

Thanks

 

[oilean]

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

[email protected]

 

[Pegasus]

If you claim this deduction in the first year and create a large rental loss for yourself, can you continue to carry forward this loss against your rental incomes into eternity? (i.e. even after 10 years is up)
What is the significance of the 10 year period exactly (presumably you have to retain ownership for 10 years or there is a clawback)?
Is the answer to the above two questions the same for Section 50 student accommodation?

 

[antoinolacht]

Yes you can carry it on in perpetuity, if I remember correctly; there is a document on the revenue site that explains all this and mentions that specific point. The 10 year thing is the minimum period you have to keep the property for there not to be a clawback, I think.

If you aren't able to foresee using the relief within 10 years though, S23 is probably not right for you. The value of a 10,000 euro tax saving in 2017 is going to be very little. You have to use up the allowance at a reasonable clip for it to be worthwhile.

I think the answer is the same for S50, but I could be wrong.


If you want to do an S23, close it and occupy it in December to get the maximum benefit (might be too late now).

 

[kerbs]

Hi - Interesting thread. I have a question on this too. I already ahve 2 rental properties and am thinking of buying a S23 at the moment (the other two do not qualify) Is it worthwhile getting a S23 if you only have 2 rental properties- is it a scheme which makes more sense - if for example you have 10 properties. Also would it be possible to purchase with my Dad - who has 3 rental properties in such a way that we could both avail of the relief (as I type that I am even thinking it is unlikely..)