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Thursday, 18th April 2024
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Capital allowances boost property investment Back  
The recent sale of La Touche House to a group of 62 Irish investors has highlighted the attractiveness of capital allowances for property investment. The group of 62 Irish investors together paid o82.5 million for the former Bank of Ireland headquarters in early April, making the deal the largest property syndication in Ireland.
In the last 5 years there have been a number of other co-ownership type purchases, however normally the number of investors would not exceed 12 as it can impact adversely upon the tax status of the property. In La Touche House, there were capital allowances totalling nearly o48 million which can be offset by the investors against Irish rental income over the term of the investment which in this case is 16 years.
According to Insignia Richard Ellis Gunne the initial return to the investors is 6.9 per cent including the capital allowances available.
The 62 members of the syndicate, most of them business and professional people, have invested o24.75 million in unit sizes of o317,000 with a minority of the investors signing up for two or three units each. The remaining balance of the debt funding came from Anglo Irish Bank.
The group of investors was assembled by Warren and Partners and estate agents Insignia Richard Ellis Gunne.
According to Insignia Richard Ellis Gunne this type of co-ownership form of commercial property investment is likely to become more common in the Irish market in the future. Traditionally, the price paid for a commercial building has been the significant barrier to entry for many investors, and buildings of this scale would normally have been bought by institutional investors, or those of very high net worth.

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