Thank you Mandelbrot for your response. By the way that's the second time you've said I had a tricky question. But it cannot be that tricky, there must be loads of people who have holidays homes that they let.
To answer your question. The property would be available for holiday lets all year, I only put in the seasons because outside of those peak periods I wouldn't imagine one could possible let it. The idea is to put it with a holiday home company. But in about a years time I would use it on occasion.
The reason I asked about Section 48 was that it was on the advertisement in DAFT. I hadn't heard of S48. S23 is also holiday lets and S50 student accommodation but it was not either of those. I am aware that most of those schemes were of no benefit as they had the tax advantage factored into the price but I guess there is some benefit where you have more than one property and have run out of mortgage interest relief etc.
I went all over the revenue website but could not find anything specific about the tax treatment of holiday homes. You would think with the amount of people who own a second home that there would be something, maybe I missed it. Maybe very few people are declaring anything.
Firstly, you could quite easily have missed this on the Revenue website:
http://www.revenue.ie/en/tax/it/leaflets/it29.html, unless you knew to search for "Tax Reliefs for Renewal and Improvement of Certain Resort Areas"!
I said it's a tricky question because it's a very fiddly area of the legislation, with the relief available depending in the first instance on whether or not you are trading and chargeable under Case I, or in receipt of rental income chargeable under Case V. see pages 20-21 here for some light reading to get you started ([broken link removed]), where you'll see there's all sorts of fiddly bits depending on whether particular things happened between particular dates. In your case, having read the tax briefing I'd expect you'd have rental income under Case V.
So you may be right that lots of people are letting holiday homes; but most of them aren't ones with the relief on them, and of those that are, there's probably a strong chance that people aren't necessarily operating/claiming everything correctly - these things only come out in the wash when people are audited, and only if the person doing the audit is
au fait enough with the relevant provisions to ensure that the relief is correctly claimed.
In the case of a registered holiday cottage qualifying for S.48 relief, the relief was a 50% initial allowance in the first year, and 5% p.a. writing down allowance. The holding period was ten years from first use of the property. The reason I would be very wary about the relief is that it is hugely costly to sell a tax relief property, because the vendor incurs a balancing charge upon disposal, equal to the allowance claimed up to that point.
The simplest way I can explain is with an example: So lets say the qualifying expenditure laid out by them at day one was 100k, and that was 9 years ago, they've claimed 95k in allowances to date. If they sell that property while it's still within its 10-year holding period, they suffer a clawback of all that relief - effectively they are treated as having received 95k of rental income at the date they sold the property. The purchaser of the property (you) then steps into the original owner's shoes and gets the benefit of the relief. My point is the original owner would be so much better off to sit tight until a year or 2 later to sell, after the 10 years have expired and they won't suffer a clawback.
Hence I advised you get someone who really knows their stuff in this area to make sure that you're getting the relief you think you are, and if not that you have some form of recourse.
Another question. A lot of people bought those section 23's but plenty of them are unlettable, and people are getting zero rent, are they still entitled to write that off against other rental income, or do they come foul of the revenue rule on uneconomic rents? Anyone experienced in the declaration of holiday homes rental income must have an idea of that.
There are different provisions governing the various schemes but regarding the student accomodation:
"in so far as rented residential relief under section 372AP is concerned, the house is, in the case of construction, without having been used, first let in its entirety under a qualifying lease, or, in the case of conversion expenditure, without having been used subsequent to the incurring of that expenditure, is first let in its entirety under a qualifying lease, and in the case of refurbishment expenditure, on the date of completion of the refurbishment is let in its entirety under a qualifying lease (or is, without having been used after that date, so first let). This type of letting must continue throughout the remainder of the 10-year relevant period except for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another."
A good article here, that also illustrates why it was a tricky question! [broken link removed]
A final point to note in relation to the amount of relief that might be available is that the property may be going for a song, less than the original cost. In this case the amount of relief available will be reduced proportionately. i.e. if the amount of expenditure attracting relief was 100k, and the property (including site cost / cost of work not carried out during the qualifying period) cost 150k, and you buy it now for 75k, then the amount of relief available to you is: 75k x 100/150 = 50k.