Revenue Note for Guidance

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Revenue Note for Guidance

408 Restriction on tax incentives on property investment


This section restricts the manner in which capital allowances on buildings may be set off in the case of participants in a scheme or arrangement for the sharing of a building by the public or by a section of the public. Small groups of individuals or companies have in the past come together for the purposes of making a joint investment in a building or structure and have been entitled to set off the capital allowances available against their income from all sources. The position of that type of investment is not changed. The restrictions apply where a scheme or arrangement provides facilities for the public or a section of the public to share in a building or structure. Recent developments in property investment have involved very efficient use of the capital allowances on certain buildings by dividing the allowances among large groups of taxpayers in what is in essence a tax efficient investment scheme rather than the purchase of a building by a small number of taxpayers as was envisaged when industrial building allowances were introduced. Under the schemes, the initial allowances are used to reduce taxable income from all sources. This section provides that an investor in such a scheme is not entitled to have the allowances on the building set off against total income under section 305(1)(b) or section 308(4). Investors are not denied the benefit of the capital allowances. However, the allowances are only available to reduce rental income.

The question of whether any joint investment in property constitutes a “property investment scheme” should be referred to the Revenue Commissioners.



(1)property investment scheme” is a scheme or arrangement with the following characteristics —

  • it provides facilities for investment by the public or a section of the public in a building or structure,
  • the facilities are promoted, whether by way of public advertisement or otherwise.

The ownership in the building can be held by participants either directly or through a trustee, nominee or similar person.

A “property investment scheme” does not include schemes for investment in property if they are of a type which commonly prevailed in the State in the 5 year period from January 1986 to January 1991. The section excludes a scheme or arrangement as respects which the Revenue Commissioners are of the opinion that the manner of sharing in the property and the number of persons sharing accords with a practice in that period. This would cover the direct investment by a small number of participants. A person aggrieved by the opinion of the Revenue Commissioners has a right of appeal to the Appeal Commissioners and to the High Court in the normal way.

specified interest” is an interest in or deriving from a building or structure held pursuant to a property investment scheme.

Restriction on the set-off of allowances

(2) An investor in a property investment scheme is denied the benefits of —

  • in the case of an individual, the set-off of allowances against total income of the taxpayer under section 305(1)(b), and
  • in the case of a company, the set-off allowances against profits of whatever description under section 308(4),

in relation to expenditure incurred on a building or structure under the scheme.


(3) A person aggrieved by a decision made under this section may appeal the decision by notice in writing to the Appeal Commissioners. An appeal must be made within 30 days of the date of the notice of the decision. The Appeal Commissioners will hear and determine an appeal in the manner provided for in Part 40A.

Relevant Date: Finance Act 2021