What is the difference between Section 23 and Section 27 tax relief on a property

teerman

I am looking at a property with Section 27 reliefs attached to it. I'm finding it hard to find any mention of what exactly Section 27 reliefs entail anywhere on the web.

Does anyone know of the differences between Section 23 and Section 27 reliefs (I think its to do with tax relief on rental income for section 23 against tax relief on all income for section 27 but I cant find anything to confirm this), or of a good online resource which describes them?

Thanks

The_Conductor

I'm open to correction on this- but I believe Section 23 relief refers to capital relief on rented residential property in designated areas/developments- whereas section 27 relief refers to capital relief on certain classes of newly constructed private residential property constructed in designated areas.

Aka- Section 23 might apply to buy-to-lets in a particular area, but Section 27 might apply to someone building for the purpose of living in the property themselves.

Note- there were other schemes- the seaside scheme from the 90s, comes to mind- whose capital relief would have been instead of S23 relief.

Someone who knows our historic tax codes- might correct some or all of the above- and please do, I'm not a tax expert.

Pro Hoc Vice

My understanding the conductor is correct,

http://www.revenue.ie/en/tax/it/leaflets/s23.pdf

http://www.revenue.ie/en/practitioner/tax-briefing/archive/63/tb02.htm

teerman

Thanks The_Conductor,

I guess that would mean then that Section 27 reliefs would not apply if the property is bought as an investment property but only if I lived in it?

Pro Hoc Vice

teerman wrote: »

Thanks The_Conductor,

I guess that would mean then that Section 27 reliefs would not apply if the property is bought as an investment property but only if I lived in it?

My understanding is section 27 applies only to things like hotels, holiday homes etc. So I can not really see how it could apply to a private home. But I may be wrong.

The_Conductor

teerman wrote: »

Thanks The_Conductor,

I guess that would mean then that Section 27 reliefs would not apply if the property is bought as an investment property but only if I lived in it?

That is my belief.
People spent big money constructing property- both for rental purpsoses, and also for PPRs- as they could essentially write off the purchase price (or a significant portion of it) over time- while generating an income from their investment.

PAYE workers in rural areas loved it- as it was written off against their gross income before determination of income tax- often meaning they paid no income tax. Some teacher's lounges even had posters on the walls advising members of how to avail of these schemes.

If you're thinking of buying a property subject to either of these schemes- get professional advice.

There were often rules associated with the properties- they might only be a certain class of building, couldn't be sold for a set period of time- they had to be a PPR or any of a long and bewildering list of other rules- that might apply.

Don't assume you're buying a tax shelter (esp. after the 2009 reforms).

Get proper advice.

teerman

Thanks for your advice guys. Ill check with an accountant familiar with the reliefs before I do anything. This is very helpful though.