Capital Allowances - hotels
14/03/1995
Query
Section 22 Finance Act 1994 changed the industrial building writing down allowance from 10% to 15%. Does the new rate apply to existing hotels on or after 27/01/94?. In the event of a sale after 27 January 1994, is the residue after sale written off over 7 years.
Decision
Section 22 of the Finance Act 1994 provides that the 15% allowance and 7 year life only apply where the expenditure on construction is incurred on or after 27 January 1994. Where the construction expenditure is incurred before this date, there is a 10% allowance, and the building has a 10 year life. A person who purchases a hotel second hand does not incur expenditure on the construction of the hotel. If, on or after 27 January 1994, a person purchases second hand a hotel, the construction expenditure on which was incurred before that date, the building still has a 10 year life, and the industrial buildings annual allowances will be by reference to the residue of the expenditure over the remainder of that 10 year life.
Income Tax
Section 272, Taxes Consolidation Act, 1997
Origin: RLS Division
File ref:IT953003