Terms and Conditions of Owner Occupier relief?

Buttercup

Hey All

Need some clarification . Had a read that with regards to owner occupier relief
A dwelling must be used solely as a dwelling by the owner after completion of capital expenditure, it must also comply with Section 23 floor area limits and qualify for a Certificate of Reasonable Cost, if applicable. Unlike Section 23 relief, no clawback provisions apply in the case of owner-occupier relief where there is a disposal of the dwelling or where it ceases to be used as the taxpayer's sole residence. However, only the first purchaser is entitled to the relief and no allowances transfer on a subsequent sale.

My Question is how long do you need to use it as your Primary residence. The properity I'm renting Not only quailifies for Owner Occupier but Rural renewal my problem is that my job maybe moving location in 12-18 months so would want to rent the property out if I move.

Thnaks in advance one and all

The_Conductor

Buttercup wrote: »

My Question is how long do you need to use it as your Primary residence. The properity I'm renting Not only quailifies for Owner Occupier but Rural renewal my problem is that my job maybe moving location in 12-18 months so would want to rent the property out if I move.

Thnaks in advance one and all

The stamp duty aspect of the equation used to preclude renting your house for a five year period- but was revised downwards in the 2008 Finance Act to 2 years.

With respect of Rural Renewal relief- by renting out the house in the first 10 years of ownership (known as the 10 year qualifying holding period)- you forfeit either

a) 5% per annum of the expenditure for 10 years in respect of new construction

or

b) 10% per annum of the expenditure for 10 years in respect of refurbishment or conversion.

(whichever you are claiming)

As you are aware these reliefs are at the higher rate of tax (and thus very valuable).

If you rent out the house and subsequently live it in again yourself- you have extinguished the right to claim the relief- but the relief granted to date is not withdrawn.

You are not entitled to claim rented accommodation relief (as you have previously used the property as your PPR).

Note: I seriously advise getting professional advice on this. It could very well be that the tax implications of loosing the reliefs associated with the property, may very well exceed any financial benefit associated with moving with your job elsewhere........

Buttercup

Thanks for that. I asked my aunt who's a solicitor and she advised against the purchase also because of the possibility of my job move in the next 2 years. She said that the tax reliefs rarely end up beining any benefit as you'll pay for them in the long run one way or another

antoinolachtnai

So this is a section 23/27 property? It might make sense to buy it as a rental, but probably not, if you don't already have rental property and if it isn't very cheap indeed.

Using the relief as an owner occupier usually doesn't make a lot of sense and the property tends not to be great value.

The_Conductor

antoinolachtnai wrote: »

Using the relief as an owner occupier usually doesn't make a lot of sense and the property tends not to be great value.

Unless you have sufficient income attracting the higher rate of tax, on which you can offset the acquisition cost either wholly or 50% thereof, over the 10 year holding period.

Someone in the Revenue Commissioners told me it was very popular with teachers for some reason (not sure )

antoinolachtnai

I think it's 50 percent, isn't it?

The problem with it is that the allowance is nearly always worth more to a buy-to-letter, and that's what makes the apartment less good value.

The_Conductor

antoinolachtnai wrote: »

I think it's 50 percent, isn't it?

The problem with it is that the allowance is nearly always worth more to a buy-to-letter, and that's what makes the apartment less good value.

Depends on whether its a new build (50%) or a conversion/renovation (100%)

I agree with you though.

rainbowtrout

smccarrick wrote: »

Unless you have sufficient income attracting the higher rate of tax, on which you can offset the acquisition cost either wholly or 50% thereof, over the 10 year holding period.

Someone in the Revenue Commissioners told me it was very popular with teachers for some reason (not sure )

On the teacher thing, I'd imagine it's because

Schools are in every part of the country, so there would be a substantial amount of teachers in a rural renewal designated area.
If a teacher gets a permanent job/contract of indefinite duration they are unlikely to leave it as they are hard come by, so the teacher is likely to live in the area in the longterm.

Teaching wage, for a teacher on full hours even for a teacher only teaching a couple of years is above average industrial wage and puts pretty much all teachers into the higher tax band.

So rural renewal is quite attractive as a tax incentive overall.

..Speaking as a permanent teacher living/working in Roscommon :pac: