Rural Renewal Tax Incentive Scheme

Tax Relief for Residential Accommodation:

Status in 2007

Many of the new houses we have for sale qualify for the following scheme as planning permission was obtained for them before the end of 2006.

Owner-Occupiers:
Tax relief is available to individuals relating to construction/refurbishment costs incurred on specified residential premises in the qualifying rural areas. A deduction of 5% is available for construction expenditure and 10% for refurbishment expenditure. The property must be occupied as a main residence for a period of 10 years in order to avoid a clawback of the relief.

Worked Example for Owner Occupiers:

Cost of House
€260,000.00
Qualifying amount for Owner Occupier Relief
€210,000.00
Relief Rate of 5% per annum (for 10 years)
€10,500.00 p.a.
 
At 42% tax saving per annum
€4410.00
Tax saving per month
€368.00
 

For a Couple both on 42% tax rate:
 
90% Mortgage
€234,000.00
Gross monthly repayments over 35 years
€973.00
Less mortgage Interest relief
€115.00
Net monthly repayment
€858.00
Less Tax Saving per month
€368.00
 
Actual Net cost per month
€490.00

 

 

 

 

 

 

 

 

Investors:
Tax relief is available for investors engaged in the provision of certain rented residential accommodation in the qualifying rural areas. Relief is also available for expenditure incurred on conversion/refurbishment of certain buildings into residential accommodation.
In order to avoid a clawback of the relief the relevant property must be let for a period of 10 years, excluding periods of temporary disuse. Leases must be for a minimum period of 3 months and the accommodation must be the sole or main residence of the tenant throughout the period of the lease.

Worked Example of Rented Residential Accommodation Tax Relief:

Cost of House
€260,000.00
 
Total Rented Residential Accommodation Relief Due
€210,000.00.
Rental Income on house (less expenses) per annum
€7000.00
Other rental income in Ireland e.g. land (less expenses)
€3000.00

Relief to carry forward to the next year
€200,000.00


 

 

 

 

Download Rural Renewal Scheme Brochure

Who will benefit?
From tax reliefs: Investors in qualifying industrial, commercial and residential premises. Landlords in designated rural areas. Owner-occupiers of certain residential accommodation within rural designated areas. From the scheme in general: Townspeople and communities in designated areas through rural renewal and spin-off investment. An increase in, and encouragement of job creation in certain rural areas of Ireland.

Which areas qualify?
38 electoral divisions in the County of Cavan
The administrative County of Leitrim
The administrative County of Longford
77 electoral divisions in the County of Roscommon
35 electoral divisions in the County of Sligo

When do the allowances apply from?
Tax Relief's for Business Occupation (Industrial Buildings and Commercial Premises) Capital allowances will apply for qualifying expenditure incurred in the period 1 July 1999 to 31 December 2006.

Investors:
The deduction applies for qualifying expenditure incurred in the period 1 June 1998 to 31 December 2006.

Owner-Occupiers:
The relief is available for qualifying expenditure incurred in the period 6th April 1999 to 31 December 2006.

Extension to Rural Renewal Scheme
The Government have extended this scheme until 31st December 2006 giving further time for properties to qualify. The Scheme was introduced to improve the economic and social situation in the designated areas over a pilot period which has now been extended. Many of our properties are in the Rural Renewal Scheme Area which is aimed at the Owner Occupier and the Rented Residential Accommodation owners.
Check with your Independent Financial Advisor as how this Tax Incentive could be helpful to you. For further details log on to: http://www.revenue.ie/services/urban_rural.htm