Noel Grealish (Galway West, Independent)
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Question 186: To ask the Minister for Finance the reason the non-principal private residence charge cannot be added to the list of allowable items specified in section 97 of the Taxes Consolidation Act 1997 by an amendment in the Finance Bill currently before Dáil Éireann, in view of the fact that the NPPR was not in existence when the Act was passed; the reason he believes the charge is not a business expense incurred solely because a person has liability to the NPPR, given that the Revenue Commissioners assess rental income on the net amount of rent received, that is, the gross rent less allowable expenses incurred in earning the rent; and if he will make a statement on the matter. [9753/12]

Michael Noonan (Limerick City, Fine Gael)
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The Local Government (Charges) Act 2009, as amended, provides the legislative basis for the charge on non-principal private residences. Policy relating to this charge is a matter for the Minister for the Environment, Community and Local Government. A person in receipt of rental income is assessed to income tax on the net amount of the rents received, i.e. the gross rents less allowable expenses incurred in earning those rents. In computing the net amount of the rents received, only those deductions that are specified in the Taxes Consolidation Act 1997 are allowable. The legislation is quite clear in this matter and section 97 of that Act sets out the allowable deductions in computing taxable rental income. As the Deputy notes the Non-Principal Private Residence charge is not included on the list of allowable items, and therefore it is not an allowable expense in computing taxable rental income.

The main deductible expenses are:

· Any rent payable by the landlord in the case of a sub-lease.

· The cost to the landlord of any goods provided or services rendered to a tenant.

· The cost of maintenance, repairs, insurance and management of the property.

· Interest on borrowed money used to purchase, improve or repair the property.

· Payment of local authority rates in the case of rateable properties used for commercial purposes.

The range of allowable deductions available to residential property investors represents a significant cost to the State. The Revenue Commissioners estimate that the amount of tax foregone in 2009 (the most recent year available) by allowing a deduction for interest on borrowings to be offset against all rental income assessable under Case V, Schedule D for both residential and commercial property was estimated at €745 million.

In the current difficult financial circumstances it is imperative that we stabilise public expenditure and tax expenditures in many areas are being reduced in order to broaden the tax base. In this context, I have no plans to introduce further tax reliefs for residential landlords.