What does Section 50 mean for me?

[Left_Blank]

I'm having some trouble understanding this legislation so I'm hoping someone could explain it somewhat.

As I understand it if I buy a section 50 property I lease it to the local third level institution and they in turn sub-let it to students attending that institution.

Does that mean that I can have no input in the running of the property and that everything is done by whatever property management company that the university employs and I effectively just sit back and collect the cheques and pay the mortgage? They advertise the property, collect the rents etc?

The other thing I can't quite understand is the details of the tax relief. If I was to buy a section 50 property (it would be my first investment property) and it was rented out for a year grossing a positive return of lets say €6000 (just bear with me here) after mortgage interest payments. As I understand it at this point I would usually have to pay tax on this return of 20% or whatever. Does the tax relief mean that I don't have to pay this tax? How long does the tax relief go on like this for?

Thanks for any help.

 

[Galwayboy]

If you don't have other rental income that is been taxed at 41% then its unlikely that a section 50 is of benifit to you. Yes in your example you would normally pay tax on the €6,000 (assuming your on the top rate of 41%) which would save you €2,460 (in your example). However its unlikely that you would have any profit after paying your mortgage, management fee and allowing for wear and tear. You will also be paying over the top for these properties due to the fact that they have the tax relief.
Regardless of the section 50 you will still be caught for the levies and the prsi

 

[Gervan]

Relief totalling the qualifying construction expenditure can be set against your rental income ( from all Irish sources), so as you claim some, the available balance still to be claimed reduces.
I don't think there is a time limit, but if you sell the property with 10 years, relief previously claimed by you will be clawed back, to be available for the new owner.

 

[Left_Blank]

However its unlikely that you would have any profit after paying your mortgage, management fee and allowing for wear and tear. You will also be paying over the top for these properties due to the fact that they have the tax relief.

So you mean that if I have no profit left over after expenses then there is nothing to tax and therefore the tax relief is useless?

Does it the relief just roll over to the next year? eg. if I make a loss in the first 3 years and then start making a taxable profit will I still have the same tax relief balance saved up as if I had made a profit from year one?

Thanks for the help.

 

[Left_Blank]

Relief totalling the qualifying construction expenditure can be set against your rental income ( from all Irish sources), so as you claim some, the available balance still to be claimed reduces.

So I think what you're saying is that a tax relief balance is built in on initial sale from the builder? This declines year by year until there's noting left unless you sell the property within 10 years. In that case you have to give all the previously claimed tax relief back and the next owner gets the full initial balance of tax relief?

Sound about right?

Thanks to you too.