section 23 deadline...contract signed but sale not complete

[nbc]

Hiya,
I'm talking to an estate agent about buying a section 23 property. She tells me that as the property is complete I will get full relief if contracts are signed even if transfer of house doesn't occur till january 2007(the relief will be over 9 years rather than 10). Is this true or a load of rubbish?
Cheers
nbc

 

[Luternau]

My understanding ishe tax break does not kick in until the property is let out. The date of signing is irrelevant. Think about it sign off plan in 2004 and close in 2006 and seek rebate for 2004-2006. Mad!
This auctioneer is just trying to get you to commit to the sale and once this is so you are in a legally binding contract to buy and not her problem. Ask for that in writing and forward to IAVI and the Revenue. Its terribly misleading and legally incorrect information.

 

[Lobby]

No, the agent is referring to the deadline from last years budget that restricts the Section 23 relief. For buildings that are not complete by end Dec 2006, the relief is reduced to 75% (then 50% next year).

But I'm still not sure how you signing contracts will allow the building to be completed by Dec 31st. As last poster says the relief only starts when the property is first let.

So, the real issue is, will the building be complete by Dec 31st, and will it be certified by the Revenue by then. It doesn't matter when you buy the apartment other than obviously you won't get the relief till next year if you don't sign till then.

So, you signing by Christmas is irrelevant to the Section 23 relief - unless you need relief in 2006.

 

[snowdrop]

I bought a section 23 in 2004 and nearly killed myself getting the deal completed before christmas as I needed the tax relief for 2004. I believe the actual completion date was the 21st or 22nd December and if I hadnt 'managed' the solicitor and bank, it wouldn't have happened.

Bear in mind that in order to qualify for the relief - the property not only needs to be completed but also inspected and signed off by bord failte, a letting management company in place and at least one official letting.

The letting company may accommodate you in giving a 'moccia' invoice for that first letting.

It all depends on what stage of completion the whole development is in.

 

[Luternau]

Hiya,
I'm talking to an estate agent about buying a section 23 property. She tells me that as the property is complete I will get full relief if contracts are signed even if transfer of house doesn't occur till january 2007(the relief will be over 9 years rather than 10). Is this true or a load of rubbish?
Cheers
nbc

Are you referring to the owner occupier relief here? If so, if the sale is closed by 31 DEc, you can get you first years relief for 2006. I cant see how you can get sec 23 tas relief on rental income if the propery that the brealk refers to has not been conveyed. Its just impossible.