In the Finance Bill 1999, the government outlined various measures it proposes to introduce, in the advent of the Bill becoming law, which will have a significant impact in the area of Commercial Property. This article comments on some of the key developments.
Park & Ride Facilities
Extension of termination dates for Urban Renewal and other schemes
Multi-storey car parks
Section 23 Relief for the provision of student accommodation
Tax changes in Rural Renewal areas
The Finance Bill 1999 has provided for tax reliefs for the provision of park & ride facilities and certain related developments. Section 63 inserts a new chapter, chapter 9 into part 10 of the Taxes Consolidation Act, 1997 to provide tax incentives to underpin the new scheme.
The scheme, which will last for three years, will give accelerated capital allowances of up to 100% in respect of expenditure on the construction or refurbishment of park & ride facilities. Similar allowances are available for residential and commercial developments that form part of the project, providing they do not exceed 50% of the total expenditure on the facility. Furthermore, the allowances will extend to expenditure on residential accommodation limited to 25% of the total expenditure.
The aim of the scheme is to relieve traffic congestion but Mr McCreevy TD, minister for finance, felt that the park and ride facility would not, in itself, be attractive to investors so the provisions cater for associated physical development.
Extension of termination dates for Urban Renewal and other schemes
The normal urban renewal reliefs for the construction and refurbishment of owner-occupied and rented residential housing is extended to expenditure made before December 31 1999.
Also in relation to the Custom House Docks area, section 36 of the Finance Bill provides that capital expenditure on industrial or commercial buildings will qualify for capital allowances for expenditure made before December 31 1999. Where 51% of such expenditure is complete by that date, capital allowance will extend to June 30 1999.
Related to the changes regarding Urban Renewal Schemes is the provisions in the Finance Bill concerning multi-storey car parks.
Section 38 paragraph (d)(i) provides for further extension of the granting of capital allowances for the construction of multi-storey car parks. Outside the Dublin and Cork Corporation districts the capital allowance provisions, which were set out in the Tax Consolidation Act, 1997, will be extended to December 31 2000 where 15% of the cost of the project is incurred by June 30 1999.
Section 23 Relief for the provision of student accommodation
Section 44 of the Finance Bill provides for the granting of a section 23 relief for rented residential accommodation provided as third level student accommodation. The relief gives a deduction of 100% of construction, conversion or refurbishment expenditure, which is offset against all rental income whether derived from the premises in question, or from other lettings. Each project will be subject to guidelines which will deal with features including the institutions which will qualify, conditions relating to the standards and location of accommodation and the categories of students whose accommodation will be covered. These guidelines will be drawn up by the minister for education and science in consultation with the minister for the environment and local government and with the consent of the minister for finance. The relief will be available for expenditure incurred between April 1 1999 and March 21 2003.
Tax changes in Rural Renewal areas
Changes have been introduced by the Finance Bill regarding tax incentives available to owner-occupiers in the Rural Renewal tax area. Section 41 provides that owner-occupiers now qualify for any refurbishment expenses to be offset against their total income at a rate of 10% per year. Construction expenses can also be offset at a rate of 5% per year. In this context the minimum lease period for rented residential relief has been reduced to three months from twelve months. Further changes include the increase in floor capacity of accommodation for newly built properties and refurbishment and the inclusion of moorings and jetties as qualifying structures for the purposes of capital allowance.
Mr McCreevy, said of these changes, "I see these extensions as a major fillip to the [Urban Renewal] scheme and a clear incentive to investors to invest in the development of the areas in Leitrim, Longford, Cavan, Sligo and Roscommon covered by the scheme."
For further information on this topic please contact Paul Eustace at Dillon Eustace by telephone(+353 1 667 0022).
The materials contained on this web site are for general information purposes only and are subject to the disclaimer.