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What is the new condition with regards to property incentive schemes to be fulfilled by the year end?

These new conditions were introduced in The Finance Act 2006 for property projects seeking to avail of the extended 31 July 2008 deadline for the various property incentive schemes. The new condition requires that work to the value of at least 15% of the actual construction costs of a particular building or development must have been carried out on or before 31 December 2006.  

Builders and developers should arrange for a quantity surveyor or architect to prepare a statement showing clearly the actual work that was carried out on or before 31 December 2006, the construction costs attributable to this work, the actual construction costs to completion of the building and the percentage of the total figure represented by the work that was carried out on or before 31 December 2006. A builder or developer who sells a completed building should provide a statement to the purchaser who will be claiming the relief together with the usual statement of costs and certificates of compliance/reasonable cost/consistency as appropriate.  The statement should also contain the name and address of the individual or company that is carrying out the construction, the name and address of the development and the relevant scheme

The 15% test relates to the degree to which work is carried out as opposed to expenditure incurred. No account can be taken of any advance payments made for work that has not yet been carried out, nor for any off-site work which has not yet been integrated into a particular building. Construction costs for raw materials and labour used, equipment hire and architects fees etc. can be taken into account in establishing the value of the work carried out where these are directly attributable to work actually carried out on the building. Construction work has to have been carried out and this work has to be manifested as an integral part of the building or development by 31 December 2006. The new 15% condition takes no account of the cost of acquiring the site or of any costs associated with that acquisition as was previously the case.  Levies or contributions paid to a local authority by a developer are not to be taken into account for the purposes of the 15% test. The value of work and costs associated with site preparation such as site clearance, laying foundations, power supply, drainage, sanitation and water supply can, however, be taken into account.

Louise Carey is an Accountant/Tax Consultant based at 32 The Square, Listowel, Co Kerry tel: 068 21109, email:lc@taxconsultant.ie, www.taxconsultant.ie