Taxes Consolidation Act 1997 section 409C

Income tax: restriction on use of losses on approved buildings

Section 409C restricts the amount of loss relief available to individuals who acquire an interest in an approved building through a passive investment scheme and then claim relief under section 482.

• A passive investment scheme arises where an ownership interest in a building is transferred, the building is or becomes an approved building within five years, and the original owner retains influence over expenditure, participates in the tax benefit, or may reacquire the interest — or where the transfer is made solely or mainly to facilitate a section 482 claim.
• Where an individual who is a passive investor claims section 381 loss relief in respect of a section 482 loss, the amount of that loss that may be set against income is capped at €31,750 per year of assessment.
• From the tax year 2010 onwards, that cap is reduced to nil — meaning passive investors can no longer claim any loss relief — subject to transitional provisions for work completed, underway, or contracted in writing before 4 February 2010.
• Any loss relief denied solely by reason of the cap is treated, for carry-forward purposes under section 482(3), as unrelieved owing to an insufficiency of income; certain transitional exclusions protect expenditure committed before 5 December 2001 or incurred before 31 December 2003 in specified circumstances.