The Finance Bill which gives effect to the Budget has been much awaited by the property industry, in particular to see how the new capital allowances schemes will work on park and ride facilities, student accommodation and private convalescent homes along with time extensions to existing schemes. This article is a brief summary of some of the measures included in the Bill which affect property. However, it should be remembered that these are only proposals at this stage and may not come into law.
Multi-Storey Car Parks
The Bill extends the termination date for relief in respect of expenditure to December 31st, 2000, but only on projects outside the areas of Dublin and Cork corporations. The extension will apply where the relevant local authority certifies that at least 15 per cent of the total cost of the project has been incurred by June 30th, 1999. In the case of projects located in the Cork and Dublin Corporation areas, existing time restraints limiting capital allowances to projects completed by June 30th next will remain. Double rent allowances will no longer be available on car parks except where qualifying leases were entered into before July 31st, 1998. However, capital allowances are due to be increased from 50 to 100 per cent with effect from August 1st, 1998.
Student Accommodation
THE Bill provides for new tax incentives for the provision of student rented accommodation. These incentives will be in the form of Section 23 type relief which can be offset against all rental income. Allowances will be available at the rate of 100 per cent for the construction, or refurbishment of third-level student accommodation. The capital allowances will be available for four years from April 1st next.
Private Convalescent Homes
THE Bill introduced a new scheme of capital allowances for the construction and refurbishment of convalescent facilities as an alternative to hospital care for patients recovering from acute hospital treatment. Allowances are in similar form to those which were previously available on hotels - 100 per cent write-off spread over seven years with 15 per cent per annum for years one to six and 10 per cent in year seven.
Childcare Facilities
THE Bill provides for 100 per cent capital allowances for expenditure on childcare facilities available on expenditure incurred on or after December 2nd, 1998. These allowances will be available on expenditure on a building or part of a building used for this purpose. The allowances will be available at 15 per cent per annum for the first six years and 10 per cent in year seven.
Park and Ride
THE Bill introduces accelerated capital allowances of 100 per cent on the construction or refurbishment of these facilities in the larger urban areas. The most advantageous provision is being made for certain commercial and residential developments at a park and ride facility, subject to certain limits.
The capital allowances on the cost of construction of qualifying park and ride facilities will be available up to a maximum of 100 per cent of the expenditure with 50 per cent allowable in year one for lessors.
Alternatively, accelerated allowances of 100 per cent in year one will be available to owner/operators.
It is proposed that commercial premises built at the park and ride facility will attract 100 per cent allowances with an initial allowance of 50 per cent. Residential accommodation located at the site will qualify for either Section 23 relief for investors at a rate of 100 per cent of the construction expenditure offset against rental income. Alternatively, there will be 50 per cent allowances for owner/ occupiers at a rate of 5 per cent per annum.
These reliefs are subject to restrictions on the basis that the residential content shall not exceed 25 per cent of the total expenditure and the combination of the commercial and residential will not exceed 50 per cent.
The scheme will apply to Dublin, Cork, Galway, Limerick, Waterford Corporations and also to Dun Laoghaire Rathdown, Fingal, Kildare, Meath, South Dublin and Wicklow County Council areas.
Enterprise Areas
DOUBLE rent allowances are being curtailed in the enterprise areas, depending upon which Finance Act established the relevant enterprise areas. To comply, qualifying leases will need to be entered into either before July 31st, 1999, or December 31st, 1999, depending on whether the 1995 or 1997 Finance Act applies. The Bill excludes airport enterprise areas from qualifying for double rent relief.
Seaside Resort Areas
TAX reliefs here have been extended for a further six months to December 31st, 1999, for the 15 designated seaside resort areas. This extension applies where 50 per cent of the cost of the project is incurred by June 30th, 1999.
Nicholas Corson is a director of agents Finnegan Menton.
