Brian Cowen (Laois-Offaly, Fianna Fail)

This amendment relates to section 473 of the Taxes Consolidation Act 1997 which grants relief for rent paid by individuals in respect of private rented accommodation. The level of rent qualifying for relief is dependent on a person's age and marital status. The Bill proposes to increase the limits on which rent relief can be claimed. For those under 55, the limit is increased from €1,270 to €1,500 for single persons and from €2,540 to €3,000 for married and widowed persons. For those over 55, the limit is increased from €2,540 to €3,000 for single persons and from €5,080 to €6,000 for married and widowed persons. Relief is granted at the standard rate of income tax, 20%. The cost of Deputy McGrath's amendment is estimated to be €21.6 million in a full year, in addition to the full-year cost of €5.2 million for the changes already provided in the Bill.

During the debate on Committee Stage, Deputy Bruton indicated the purpose of the amendment was to ensure equity of relief between mortgage interest relief and tax relief on rents. Mortgage interest relief is not differentiated on age grounds but between new, up to seven years, and old mortgages. The rates are €8,000 for a married couple and €4,000 for a single person in respect of a new mortgage, and €5,080 for a married couple and €2,540 for a single person in respect of old mortgages.

Rather than introducing equity to the tax reliefs on rents, the amendment could arguably introduce bias towards those aged 55 and over as compared with first-time house purchasers. The amounts of the reliefs are different but the principle behind both is to concentrate on those most in need of them, that is, first-time buyers and elderly tenants. While I have increased the rent relief this year, I have not altered mortgage interest relief. However, as is normal practice in regard to all tax reliefs in the context of the annual budget, limits for both mortgage interest and rent reliefs are kept under review. Over the coming years, I will consider the extent to which it is desirable to have a closer alignment between the two reliefs.

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