Vol. 497 No. 2
217 Mr. Gregory asked the Minister for Finance if he will review the anomaly whereby section 23 tax relief is available to investors purchasing second-hand properties within the ten year period and is not available to owner occupiers purchasing the same second-hand properties. [24526/98]
The reliefs known as section 23 reliefs are available in respect of rental income arising from property made available for renting where expenditure has been incurred in the construction, conversion or refurbishment of such property. Among the conditions for the reliefs are that the rental property must be let for a minimum of ten years; and if the property is withdrawn from renting within the ten year period, the full amount of the relief previously granted is clawed back; and if the property is sold within the ten year period to another owner, the full amount of the relief is clawed back from the original owner, but if the new owner continues to let the property the relief will pass on to the new owner.
Owner occupiers of residential property also benefit from tax exemptions in certain designated areas. A qualifying premises for the purposes of the relief is one which is first used after the qualifying expenditure has been incurred by the individual as his or her only or main residence. Under this owner occupier relief, 5 per cent per annum of the construction cost or 10 per cent per annum of the refurbishment cost is offsettable against all the income of the owner occupier for ten years. Owner occupiers who sell their property within the ten year period are not subject to a claw back of relief but the remainder of the relief is not passed on to the new owner. The introduction of a claw back on the owner occupier allowance would involve complex legislative provisions regarding balancing charges which could discourage potential owner occupiers purchasing homes in designated areas. The two types of relief i.e. the section 23 relief and the owner occupier relief are distinct and separate reliefs and are not interchangeable. The purpose of the incentives is to encourage the construction or refurbishment of new residential accommodation. It is not considered anomalous in the circumstances that no relief is given to an owner occupier purchasing a second hand building.
