Great News for Smart Business People - Commercial Rural Renewal Relief (CRRR)
Press Release | Conditions for Relief | Clawback of Relief | Sheltered Income | Exclusions
Despite the economic downturn it’s not all doom and gloom – not if you buy or lease certain commercial or industrial buildings in Carrick on Shannon.
You can avail of accelerated capital allowances – of a whopping 50% tax relief immediately. However, only a limited number of properties qualify – so anyone considering taking up this exciting opportunity needs to act quickly.
The properties qualify under the Rural Renewal Tax Incentive Scheme, which was introduced by the government in 1998 to attract investors and business to the area. The tax incentive of accelerated capital allowances is offered – increasing it from 4% to 50% in the first year.
Now the Rural Renewal Scheme has ended, and only the very limited number of properties available in Leitrim qualify. Click here to see the Properties Available with CRRR
Usually a commercial or industrial building attracts an annual capital tax allowance of 4% a year over 25 years, which is considered the life of the property. Under the Rural Renewal Scheme, relief of 50% can be claimed in the first year, and 4% per year after that until all qualifying expenditure is claimed. The expenditure which qualifies for capital allowances is the cost of the building’s construction/refurbishment/conversion.
To see examples of how this could benefit you click on one of the samples below:
Example 1: Company purchases industrial building for own use
Example 2: Individual with rental income buys industrial premises and leases to a company
Example 3: Individual without rental income relocates business to Leitrim
The properties must be used for a trade, profession, or for manufacturing. They can be bought by an owner-occupier or by an investor who will let the property to a tenant on commercial terms – for example offices, factories, warehouses. The owner or lessor has to hold on to the building for 13 years, or the tax relief will be clawed back.
The 9 properties now available vary in size and price. Among them are office units, the smallest is of 1,295 square feet, and has a guide price of €60,000 + VAT and 3,000 Square feet office premises with a guide price of €475,00 plus VAT. A number of light industrial properties, including warehouses and retail units, are among those on offer, varying from under 2,000 square feet to 5,000 square feet; some are shells, others are stand alone units. There are also large units in prime locations ranging from 19,000 square feet to 53,000 square feet suitable for a range of uses.
Qualifying Industrial/Commercial Building
A qualifying industrial building is a property used by an owner-occupier or let for the purposes of a trade or for commercial use – e.g. a factory, mill, warehouse or similar premises. A qualifying commercial building means a building in use by an owner-occupier for the purposes of a trade or let on commercial terms, e.g. offices.
Qualifying Expenditure
The expenditure which qualifies for capital allowances is the expenditure incurred on the construction/refurbishment/conversion work carried out in the qualifying period (i.e. up to 31 July 2008).
Where work commenced but was not completed by 31 July 2008, only the cost of work carried out up to that date qualifies for relief.
The cost of the site does not qualify for capital allowances.
Where the expenditure incurred in the qualifying period is refurbishment expenditure, in order for the accelerated allowances to be available, the amount of the expenditure must at least equal 10% of the market value of the property immediately before the expenditure was incurred.
Conditions for Relief
The deadline for incurring the qualifying expenditure was 31 July 2008. However, this
deadline does not prevent owner-occupiers or lessors from claiming capital allowances on the
expenditure incurred up to that date, provided the following conditions are satisfied:
place by 31 July 2006.
a) that the local authority was satisfied that work to the value of not less than 15% of
the actual construction costs was carried out by 31 December 2006. (Note: the cost
of acquiring a site or of any costs associated with that acquisition are ignored).
b) that the actual amount of expenditure incurred on the construction of the building
was incurred by 31 December 2006, and
c) the projected amount of the balance of the expenditure to be incurred on the
construction of the building.
4. Full relief is available for expenditure incurred in 2006. However, the allowable
expenditure is reduced if it was incurred in the period from 1 January 2007 to 31 July
2008, as follows:
• Up to 31 December 2006 – 100% allowable;
• 1 January to 31 December 2007 – 75% allowable;
• 1 January to 31 July 2008 – 50% allowable.
5. A builder/developer who sells the completed building must provide the certificate to the
purchaser.
Clawback of Relief
Tax relief would be clawed back by way of a balancing charge if the building is sold within 13 years of it being first used.
Sheltered Income
Owner-Occupiers can offset the capital allowances against total income. Lessors must offset
the capital allowances against Irish rental income firstly and any excess can then be set
against other income up to a maximum of €31,750 p.a. Any unrelieved capital allowances
can be brought forward against future Irish rental income only.
Exclusions
The accelerated allowances on expenditure will not apply in the following circumstances:
1. Property developers and individuals connected with property developers are not entitled to avail of the relief. Some common examples of connected persons are an individual and his or her spouse, relatives and in-laws, partners in a partnership, companies under common control and a company and its controlling shareholder(s).
2. Where expenditure is incurred on the construction or refurbishment of a building or
qualifying premises in use for the purposes of a trade, the capital allowances are restricted
in certain sectors for industrial and commercial buildings. These sectors are the
production, processing and marketing of agricultural products, the fishing, motor vehicle
and coal industry, the transport, steel, shipbuilding and synthetic fibres as well as the
financial services sectors.
However, the above restriction does not apply to lessors of buildings/structures which are
in use by lessees for the purposes of a trade carried on in any of the above sectors or
industries.
3. Where a building is in use for the purposes of a trade and the number of employees is 250
or greater.
4. Where grant aid was provided by the State in relation to the construction or refurbishment
expenditure.
Restriction on use of tax reliefs by high-income individuals
From 1 January 2007, individuals whose income in a year exceeds €250,000 will not be able
to fully avail of certain tax reliefs in calculating their taxable income for that year and future
years.
Free Enterprise Clinic
Considering setting up your own business – we can make your life easier – come along to a Free Enterprise Clinic in the Landmark Hotel, Carrick on Shannon on Tuesday, January 27th anytime between 4pm-6pm.
Agencies which can help you with Starting up/relocating a business will be there to talk to you on a one-one basis. The agencies will include:
Leitrim County Council - Planning and Economic Development
Leitrim County Enterprise Board
Leitrim Integrated Development Company
Enterprise Ireland
IDA
Further Information from Michelle Reynolds in the Community & Enterprise Department, Leitrim County Council at 071 9650496 or email mreynolds@leitrimcoco.ie
There are also two other events happening which may be of interest to you:
1. Enterprise Start Workshops
It is a free 2 night workshop “Enterprise Start” from 6.30pm – 9pm on Tuesday, January 27th and 6.30 – 9p.m. on Wednesday, January 28th in the Landmark Hotel, Carrick on Shannon. This workshop will be for anyone who is interested in the concept of starting an innovative, technology based project with export potential in either manufacturing or internationally traded services.
Click here for full details on Programme and Agenda
Pre-registration for the 2 night workshop is essential.
For further information please contact Mary Boyle, Enterprise Ireland at 071 9159700 or mary.boyle@enterprise-ireland.com
2. Start Your Own Business Training
Leitrim County Enterprise Board is delivering a Start Your Own Business Training course commencing on Tuesday February 3rd 2009.
This programme is geared towards those who are considering establishing their own business or who have recently done so, it will run for six weeks one evening per week from 7-10pm.
Programme Content includes:
Self Assessment, Legal Issues for Start Ups, Preparing a Business Plan, Marketing for the Small Business, Researching the market, Finance, Funding Sources, Basic Book keeping, Sales, ICT & the Small Business.
Further information from Nicola in Leitrim County Enterprise Board at 071 9620450 or email nicola@leitrimenterprise.ie