Report on Multi-Unit Developments - Law Reform Commission

uilding investment fund to any potential buyer, together with a report on the
expected depreciation of the development‟s structure, fixtures and fittings.
6.30 In the Consultation Paper, the Commission discussed its concern
about the potential ‗ghettoisation‘ of areas where multi-unit developments are of
poor quality or are not adequately maintained are discussed. 26 The
Commission is strongly of the view that there is an overall social benefit in
ensuring that the fastest growing type of housing in Ireland, apartments,
remains viable on a long-term basis. Based on the social policy aspect of the
importance of building maintenance funds, the Commission has concluded that
any interest earned on the building maintenance fund monies should be
statutorily exempt from Deposit Interest Retention Tax (DIRT). 27 The
Commission considers that owners‘ management companies should also be
exempt from further possible reporting requirements such as returns to the
Revenue Commissioners on interest earned. 28
6.31 The Commission recommends that building investment fund monies
should be statutorily exempt from any charge to tax for the purposes of the
Taxes Consolidation Act 1997.
6.32 In the Consultation Paper the Commission provisionally
recommended that building investment funds should be held in a special
protected account separate from the owners‘ management companies‘ working
accounts. 29 In line with the social view of the building investment fund, and the
separate taxation treatment that should be given to it, the Commission
reiterates the view in the Consultation Paper that the building investment fund
monies must be kept in a bank account separate to any other account operated
by either the owners‘ management company or property managing agent. 30 This
26
Op cit, at paragraph 2.04.
27
Deposit Interest Retention Tax (DIRT) is charged at the standard rate of income
tax (20%) and is levied on the interest made from funds on deposit in bank
accounts in Ireland. Arguably, a further justification for the waiving of taxation on
building investment funds is the fact that apartment owners do not avail of
benefits such as tax relief on, eg, bin charges, of which occupiers of more
‗traditional‘ housing can avail.
28
Where the management undertaking is a corporate structure, the Commission
notes that it must continue to comply with its reporting requirements to the
Companies Registration Office.
29
(LRC CP 42-2006) at paragraph 4.122.
30
This is in line with the United Kingdom‘s Royal Institute of Chartered Surveyors
(RICS) recommendations from their code of practice for residential development
management.
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