Section 48 Relief

tm2204

I own a Section 48 Tax property in Co. Clare.

Can anybody tell me the full relief I can claim yearly as a self employed person?

Is it (a) % yearly capital allowance and (b) yearly mortgage interest relief or can you also claim (c) yearly allowance for rental income? i.e. a total of 3 allowances?

Thanks in advance.

Mr. Incognito

You get 4 % of the capital expenditure as a relief against income tax over 25years.

http://www.revenue.ie/publications/txbrefng/tb60/frameset.htm

yearly mortgage interest relief

Only applies on your prncipal private residence. Not on investment properties so this is out.

or can you also claim (c) yearly allowance for rental income?

The 4 % capital relief portion is above can be offset against all types of income. Qulifying Rental expenses are deducted from your gross rent received and the net is assessed under Case V. You cannot offset the 4% against rental income and self employed income both. It's one relief against gross income whatever the source.

tm2204

Well your wrong at least with the capital allowance part. 1st year the allowance was 50% of the cost with a further 5% per year for the next 10 years.

Was really asking re the rental income relief and mortgage interest relief (this is an investment property). S48 definitely has mortgage interest relief as mine is set against my rental income but I was just checking to see if you get any other kind of relief also.

Tks....

Mr. Incognito

Mortgage Interest costs are allowable deductions against rental income. This is different from mortgage interest relief on a ppr.

As for the capital allowances- I presumed it was a holiday home you are renting out and the tax briefing states:

The main changes see specific provision being made for the first time for capital allowances for guesthouses and holiday hostels registered in the appropriate register kept by Fáilte Ireland under the Tourist Traffic Acts. This applies in respect of capital expenditure incurred on or after 3 February 2005. The expenditure can be written off over 25 years at the rate of 4% per annum. Capital allowances for hotels have been made conditional on the hotel being registered in the register of hotels kept under the Tourist Traffic Acts. The registration requirement applies in respect of capital expenditure incurred on hotels on or after 3 February 2005 but is subject to transitional arrangements. Finally, the new measures provide clarification that holiday camps must also be registered in the register of holiday camps in order to qualify for capital allowances.

If my understanding is incorrect let me know.