The April tax deadline is drawing near and investors are mopping up what is left of properties with Section 48, 23 and the newer Section 50 tax relief. Apartments in Dublin's innercity areas designated for tax incentives, particularly in Temple Bar and around Smithfield, have generally sold out in record time, with overnight queues not unusual. The number of city properties is dwindling now that the tax-break scheme is coming to an end. The latest Temple Bar development is a small infill block of eleven one and twobedroom apartments squeezed in between Luigi Malone's restaurant and Fitzer's on Fownes Street. The selling agent is commercial property auctioneer Davin.
Owner-occupiers can set 50 per cent of the construction costs off all income over a 10 year period. Investors who buy to rent out can set this off against all rental income in year one. Current rents in the city centre average £600 per month for a one-bed and £800 for a two-bedroom apartment.
The Wooden Building, where apartments will be auctioned by Hooke & MacDonald next month, is the penultimate building to go on sale in Temple Bar and the last opportunity for tax breaks in the area. Reserve prices start at £180,000 for the smallest units. When the last Temple Bar scheme, Scarlet Row, goes on the market in early May, the rejuvenation of Temple Bar will be complete. Both the apartments in the Fownes Street scheme and in the Wooden Building are the ultimate in modern chic, with lavish use of wood, glass and steel.
Of the few remaining Section 23 apartments elsewhere in the city, Hooke & MacDonald has three one-bedroom and two-bedroom apartments at 125 Francis Street, priced from £180,000; four one, two and three-bed units at Smithfield Gate from £168,000 and two twobeds at Mountjoy Square costing £220,000.
Those looking towards the docklands for tax incentives will be disappointed by the Government's decision to restrict the tax breaks to the development on the site of the former Sheriff Street flats. While the majority of these have been sold, another 120 are due to be sold later this year and these will carry restricted tax breaks. However, developers are putting pressure on the Government to extend the tax concessions in the docklands, given that Brussels will only object to commercial schemes.
With the end of the Urban Renewal Scheme in sight, investors are turning to the new Section 50 scheme, which offers tax relief on rental properties purpose-built as student accommodation. The first of these, Glasan, is located across the road from the Galway/Mayo Institute of Technology campus. Since the launch on February 2nd, agent Sherry FitzGerald has notched up more than £16 million in sales, 60 per cent of these to Dublin investors. Out of 157 units at the Galway scheme, 20 are left for sale; four six-bedroom houses at £299,000 and the 16 threebed townhouses at £199,000. Ninety per cent of the purchase price can be offset against all Irish rental income, whether residential or commercial. Unlike previous schemes, the time limit is flexible and relief can be carried forward. Several Section 50 proposals in the planning stage around the country should get this scheme under way in earnest.
Investors came off the starting blocks at the beginning of the year in a huge rush to buy up what was left of the Seaside Resorts scheme properties around the country. Tax relief on all rental income is contingent on letting the property to tourists for most of the year. There has been some disquiet over the short rental season and uncertain capital appreciation. A good rule of thumb is to look at the underlying value of the property and make sure you would buy regardless of tax breaks. In the last two weeks, all but two of the stone-faced bungalows at Ardamine Grove, near Courtown harbour, have been sold, says Ray Phillips, of the Phillips Partnership. One of the remaining two is a furnished showhouse at £125,000.
Still in Wexford, Hooke & MacDonald have 10 units left on the Glencove scheme at Courtown, priced from £115,000, eight threebedroom bungalows at Pebble Beach, Tramore, and eight apartments from £93,950 at Atlantic Coast, also in Tramore.
Tommy Curran of Vairex Developments is selling the last five of a scheme of 25 houses on Achill Island, Co Mayo. Two-bed cottages are £110,000 and threebedroom two-storey houses are £119,950. In Co Cork, Hooke & MacDonald is selling the last five apartments at Strand Palace, Youghal, from £149,950.
Lansdowne Properties has 25 apartments and five houses left for sale in two Bundoran schemes with the coveted section 48 relief against all income. Prices start at £115,000. This agency also is selling Achill Island apartments at £105,750 and two Oranmore houses for £250,000.
The Rural Renewal scheme is another scheme with builtin tax breaks, designed to breathe new life into de-populated parts of the midlands and the west. This is due to run until December, 2002. Designated areas include all of Leitrim and Longford and parts of Cavan, Sligo and Roscommon.
Ninety per cent of capital allowance can be set off against all rental income and there is also mortgage interest relief. Owner-occupiers can offset 50 per cent of construction costs over a 10 year period.
Anyone not ready to take advantage of this year's deadline can be sure that with Section 50 and the Urban Renewal scheme around for some time to come, they haven't missed out on property tax breaks for next year.
