Investment Proposal

1 Bed Retirement Home 2 Bed Retirement Home
Building €303,750 Building €343,000
Fixtures and Fittings €6,250 Fixtures and Fittings €7,000
  €310,000   €350,000
ax Savings on Capital Allowances €135,614 Tax Savings on Capital Allowances €153,111
Overall Net Cost of Homes over 15 years €174,386 Overall Net Cost of Homes over 15 years €196,889

Figures based on illustrative example



Capital allowances are available in respect of the qualifying construction cost. The rate of allowance available is 15% per annum for 6 years and 10% in year 7. These allowances are available firstly for offset against profit rent from the residential unit. Any balance can be offset against Irish source rental income with any further excess available for offset against total income (including PAYE income) to a maximum of €31,750 for an individual or €63,500 where a married couple own the unit jointly provided they each have sufficient income to utilise the allowances.

If the capital allowances exceed income in any year, the excess can be carried forward for offset against future rental income only. Capital allowances are also available in respect of expenditure incurred on furnishing the residential unit at a rate of 12.5% per annum for 8 years. These allowances are available for offset against all Irish source rental income.

This development will be completed in 2007 and in that case the capital allowances will be available for offset for the tax year 2007 onwards. As units were substantially completed by 24th March 2007 the majority of the construction cost will qualify for 100% relief while any balance of construction cost incurred after that date will qualify for 75% relief. The tax life of the residential unit is 15 years and allowances will be clawed back if the residential unit is sold or ceases to be used as a qualifying residential unit within the 15 year period.



The residential units qualify for capital allowances provided certain conditions are satisfied.
In order to qualify for capital allowances, the residential unit must be operated or managed by a registered nursing home, which will provide back-up medical facilities (including nursing) to the occupants of the homes when required. An on-site caretaker and daycare facilities must also be available. These services will be provided by Thomond Lodge Nursing Home, which is adjacent to the development.
The operator will ensure that all the legislative conditions set down in the Taxes Acts will be complied with to ensure that the units remain as qualifying units within the 15 year tax life of the property.


thomondIndividuals will lease their retirement homes to Thomond Lodge Nursing Home under an initial lease of 9 years 11 months.

The lease rent has been set as set out below for the first four years of operation:
- 2 Bed Retirement Home €15,000 (€288 per week)
- 1 Bed retirement Home €13,000 (€250 per week)
- Thereafter the rent for each unit will be based on a proportion of the entire rents accruing to the operating company in that year

The marketing and letting of this development will be undertaken by the operating company.

The lease rent will be subject to an annual management fee payable to the management company. This company will be responsible for the management of the retirement homes and the provision of services to the owners.

The management company will enter into service agreement with each purchaser to provide a comprehensive management service to include:

Services provided to owners will include:

- On-site caretaking
- Maintenance, cleaning and repair of the common areas including grounds within the development.
- Refuse disposal

Services provided to occupants will include:

- Refuse collection
- 24 hour emergency nursing cover
- Security on site
- House maintenance (excluding decoration)
- Garden and Grounds maintenance
- Maintenance by Janitor for minor jobs
- Access to day centre and organised activities

Other facilities available at a very reasonable cost from Thomond Lodge Nursing Home will include:

- Hairdressing in Nursing Home by appointment
- Laundry in Nursing Home
- Meals in Nursing Home or delivered to retirement home by appointment.
- Shopping service facility


At the end of 15 years the purchasers of the units have the option of continuing to let the residential unit to the operating company, let it privately to an elderly or infirm person, occupy it themselves if they are elderly or sell it on the open market.
It is a condition of the planning permission that these retirement homes are for occupation by the elderly.


Interest relief is available on borrowings to acquire the residential unit at the taxpayer's marginal rate of tax against all Irish source rental income.


Stamp Duty is payable on the VAT exclusive cost of the residential unit excluding fit-out.


thomond- Investor has sufficient total income and rental income at the marginal rate to absorb the building allowances and fit out allowances respectively each year
- No significant changes in the taxation legislation
- Tax rate is 41% plus PRSI and levies @ 5%
- Based on estimated qualifying construction costs of 95%
- These calculations are based on the current rates of capital allowances
- Investor does not come within restrictions on claiming tax reliefs in excess of €250,000


Capital Gains Tax may be payable on any gain arising on the disposal of the residential unit .A clawback of capital allowances will occur if the residential unit is sold in the 15 year period from the date of first letting. A total clawback of allowances claimed will also occur where the residential unit ceases to be a qualifying residential unit in the 15 year period.


(the purchaser can claim the following allowances)tax relief nursing home

The information contained in this document is for illustrative purposes only. The developer and the advisors cannot accept responsibility for any loss or damage, however arising including failure to obtain any tax savings or allowance or other-wise, occasioned by any person acting or refraining as a result of the information enclosed herein. These particulars are issued on the understanding that they will not be construed as forming part of any contract.