It seems that there is plenty to celebrate in recent times when it comes to property on Achill Island. According to an average of listings on Achill Island Auctioneers website. The average for a site with planning permission for at least one house is in or around €100,000. This seems quite ludicrous when you think that the nearest economic hub is Castlebar\Westport. It begs the question why have property prices exploded in the west of Ireland in the face of absent facilities and economic misery?Irish property investors have been able to avail of numerous tax breaks which have further enhanced the value of their investments.

The return on a residential property investment is typically a function of rental income and capital appreciation. Rental income in itself will not cover the cost of borrowings in the initial years of the investment at least, but capital appreciation on the property is the biggest driver for investors.

For many investors the property is being purchased either to secure a pension or to make provision for choildren at a later stage when they might require accommodation when they go to college or begin a career. For others, its simply ba sound investment, based on the rental returns and capital appreciation which can be achieved.

Having made the decision to invest in such a property there are ongoing tax issues to consider. Rental income is taxed as normal income, whether the landlord is resident in Ireland or not. The tax is paid on the self assessment system in the same way as for self employed persons. Capital gains tax of 20% is payable on any profit made on the property when it is sold.

Various expenses can be offset against income tax. These include ground rents paid on the property, rates, maintenance costs including cleaning, repairs and insurance, management costs including payments to a management company, expenses incurred in negotiating a lease, and accountancy fees incurred in preparing a rental account. Capital expenditiure on items such as furniture and appliances can be written off in a similar fashion to other business capital investments.

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