Property Based Incentives IT

Introduction

The 2004 Returns of Income (Forms 11, 11E, 12 and 12 Directors) contain a requirement to return details of certain allowances and reliefs. The information sought is capital allowances and reliefs on the following property based incentive schemes:

• Urban Renewal
• Town Renewal
• Seaside Resort
• Rural Renewal
• Multi-story Car Parks
• Living over the Shop
• Enterprise Areas
• Park and Ride
• Student Accommodation
• Hotels [Defined S.268(1)(d)]
• Holiday Cottages [Defined S.268(3)]
• Nursing Homes [Defined S.268(1)(g)]
• Housing for elderly/infirm [Defined S.268(3A)]
• Convalescent Homes [Defined S.268(1)(i)]
• Qualifying Private Hospitals [Defined S.268(1)(j)]
• Qualifying Sports Injury Clinics [Defined S.268(1)(k)]
• Buildings used for certain childcare purposes [Defined S.843A]

The information requested in this part of the return is the ‘specified details’, to which Sections 1052(1)(aa) and 1084(1)(ib) TCA 1997, refers. A copy of Panel L from the Form 11 is reproduced opposite.

What amount must be returned?

The information required is the claim for the relief in the year. It does not include amounts carried forward as either losses or capital allowances from prior years.

Example

Original allowable expenditure on property	100,000
WDA claimed for 2004 (say 15%)	15,000
Unused capital allowances forward	12,000
Total allowances available for 2004	27,000
Amount used in 2004	9,000
Carry forward to 2005	18,000

The amount to be entered in this part of the return is 15,000, that is the amount of the writing down allowance.

Note: The information entered in this panel is for information purposes only. You will still have to claim the allowance in the appropriate section elsewhere in the returns.

What is requested?

The information is sought under two main headings, Residential Property and Industrial Building Allowance. Each of these main heading is further divided between Owner Occupier and Investor/Lessor.

Residential property

Owner Occupier - If an allowance is due in 2004 the amount to be entered here is the annual amount of the allowance, irrespective as to when the property was purchased.

Rented Residential Property - This relief is commonly known as ‘Section 23’ relief. As this relief is granted in full in the year in which the property is first let under a qualifying lease, information on this relief is only required in that year. Unused relief is carried forward as a rental loss and therefore is not required in this panel.

Industrial Building Allowance

The recording of the relief here is the same for both owner occupiers and Investor/lessors. An Owner Occupier is a person who owns the ‘relevant interest’ in a property and the property is in use for the purpose of a trade carried on by him.

A lessor is an individual who lets a building to a lessee.

Some questions

Who should complete this section?

Everybody who is claiming tax relief on a property incentive scheme.

What figures should be entered on the return?

Enter the amount claimed in 2004 only. See earlier example.

An investment was made in a property a number of years ago. Does this section have to be completed?

Regardless of when the property was purchased, or the investment made, if an amount of relief is claimed for 2004 it must be entered in Panel L.

There is no longer any relief due from the property. What should be entered on the return?

Nothing. If the tax relief has all been used up, or even if the relief now due is only a carry forward of unused amount from a previous year, then no figure should be entered in Panel L.

The business has a turnover is in excess of €13 million. Accordingly paper accounts and financial statements are required. Does Panel L have to be completed?

Yes. Panel L is separate from the Extracts from Accounts pages.

The property investment is made through a partnership. The partnership makes its own returns. Does the individual’s share have to entered on the Form 11/11E?

Yes. Each partner accounts for his or her share of the investment separately.

Both spouses have separate investments. How is this shown on the return?

Where the husband and wife are assessed under Section 1017 TCA 1997, i.e., under joint assessment, a single tax return should be made showing income, allowances and reliefs of both spouses. In Panel L of the return a single figure is required for each relief. If both spouses have claimed relief for the same type of investment the aggregate should be entered in the appropriate box.

Does the amount of the original investment need to be returned?

No. Only enter the amount of the relief for 2004.

Full details regarding this property have already been sent in to Revenue. Do they need to be sent in again?

No. But the amount of the tax relief claimed in 2004 has to be entered in Panel L.

It will take time to get these figures together. Can they be sent in after the return?

No. This is part of the Return of Income. If details are submitted late a surcharge for late submission of return may arise (Section 1084(1)(b)(ib) TCA 1997).

There are no investment properties. What is required in this part of the return?

This section should be left blank. Do not put any zeros in the boxes or a line through the page.

A “Section 23” property was purchased in 2004 but to date has not been let. What figure is put on the return?

As no relief is due in 2004 this section should be left blank.