Tax incentives
Thursday May 27 2010
WHILE tax incentives for home buyers and residential investors are being phased out they can still be available for some properties both new and second hand houses and apartments.
These incentives are most attractive for home buyers who buy these types of properties in counties Leitrim and Longford as well as in parts of Cavan, Sligo and Roscommon, an area known as the North Shannon region, as such buyers can claim half of the construction cost of their homes against their income tax bills over a period of 10 years.
Tax incentives are also available for a range of other types of accommodation such as holiday homes which are available for renting out to tourists, student accommodation near universities and third level colleges.
They may also be available for some homes in urban renewal areas of towns and cities around the country.
However all of those tax incentive properties outside the North Shannon region are only of interest to residential investors and particularly those who own a number of rental properties already.
This is because such investors can only use the tax incentives to reduce their tax bill on rents from properties and cannot use it to reduce their tax on other income.
For example a person who buys a tax incentive student apartment for €200,000 could be allowed up to 80pc of the price which would be €160,000.
They would then be able to earn as much as €160,000 from property rents over 10 years, or an average of €16,000 a year, without paying tax on the rents.
If they were to sell the property within the 10 years they might have to pay back any tax relief claimed but they might also be able to pass on the tax incentives to the buyers and such a tax incentive might add to the price which a buyer would pay for the apartment
