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Investment Structure
Purchase Price - Phase I - €475,000
On completion, investors will pay the promoters the purchase price plus Vat
for the three bedroom units which includes fit out. Investors will be able
to reclaim the Vat on the purchase price.
Interest Only Mortgage Package up to 100% finance available
Special mortgage packages are available whereby investors may borrow up to
100% of the purchase price, subject to normal lending criteria. The loan can
be for a term of 10 years with interest only payments being made over the term
of the loan.The loan may be repaid at the end of this period from the proceeds
of the sale if the investor so decides to dispose of the property.
Guaranteed Rental Income for 7 years
Investors will lease their holiday homes to the promoters on a full repairing
and insuring 21 year long lease (with a break clause at the end of year10)
at a guaranteed net annual rent of 3.00% of the purchase price exclusive of
Vat for seven years.
The Management Company
A leading hotel group will manage the holiday suites/homes to the tourist market
as part of a 4 star holiday resort comprising the suites/homes and the adjoining
hotel complex.
Capital Allowances
The holiday homes will be eligible for Failte Ireland Holiday Cottage registration
on completion. As a result of this, investors can claim capital allowances under
Section 268(1) d of the TCA 1997. The allowances arising are available for offset
against all Irish rental income. Tax allowances are available in respect of qualifying
expenditure, effectively the construction cost of the holiday home, incurred
before the 31st December 2006, at a rate of 10% per annum for ten years. If the
total capital allowances available on the holiday home exceed rental income the
excess allowances will be available for carry forward against future rental income.
Mortgage Interest Relief
Interest paid on borrowings to fund the purchase of a holiday home will be available
for offset against Irish rental income.
Value Added Tax
The investor should register for Vat in advance of the closing date. Investors
will be charged Vat @ 13.5% on the acquisition of the holiday home (and 21% in
respect of fitout) but they will be entitled to recover this Vat on the creation
of the long lease. Vat 4A procedures will be used to alleviate the need to pay
and reclaim Vat. As is normal, Revenue approval needs to be received for this
before the creation of the lease.
Stamp Duty
Stamp duty will arise on the purchase of the property at the rate appropriate
to the individual holiday home.