PROPERTY BASED CAPITAL ALLOWANCES
“The draconian retrospective restriction on capital allowances in Budget 2011 was both unexpected and unwelcome,” writes Ernst & Young partner Jim Ryan. “All unused capital allowances (arising to passive investors) and Section 23 type reliefs arising after or carried forward from 2014 will be lost. As investments would have been made on the reasonable assumption that reliefs would be available for the lifetime of the investment, many investors will be adversely affected by these measures.”
Elsewhere in the same newspaper, the reporters are also on top of this story. The Government is facing a legal challenge to its proposal to end some property-based tax reliefs prematurely with the Irish Property Owners Association branding the measures as “bordering on the criminal”.
The association’s chairman Stephen Faughnan said it would be making an “all-out effort” to make sure the changes didn’t go through in the Finance Bill.
“It is unacceptable for anyone to change the terms of a contract after it has been signed and the monies paid, but for a Government to do so is bordering on the criminal,” he said.
The measures will affect people who used Section 23 tax breaks to buy properties. This allowed them to reduce their tax bills on income from any investment property they owned. The new amendment means that from January 1, the relief will only be available on that portion derived from Section 23 properties, rather than on their total investment income.