Brian Lenihan Jnr (Dublin West, Fianna Fail)

A similar amendment was tabled on Committee Stage. The effect would be to exclude from the new restriction the amount of interest that can be deducted when computing a person's taxable rental income on interest paid by individuals who had occupied a house as their principal private residence before the house was rented out for residential use.

The Deputy's concern relates to possible circumstances of hardship that might arise in the current economic climate where a person loses his or her job while still having a large mortgage repayment to meet. Individuals who find themselves in such circumstances may well seek to secure sources of income to keep up these repayments, including the possible renting out of a house. While individuals may have an option to help defray the cost of a mortgage repayment short of vacating their homes, such as the rent-a-room relief scheme, such options may not be available in all circumstances. Certain individuals who have lost their jobs may well decide to move back in with their parents or other family members so as to rent out their home.

The immediate financial benefit from such a course of action would be obvious as they move from having to fund the mortgage from their own resources to having it wholly or partly funded from rental income. In that regard, if the individual concerned is unemployed it is highly unlikely that the individual would be in the position of having to pay tax on net rental income on foot of a reduction in interest deductibility announced in the budget.

A single person getting the top rate of jobseeker's benefit, currently over €204 per week, would need to be in receipt of net rental income in excess of €7,676 a year before they would pay tax. This is because their personal and PAYE credits would act to absorb income tax chargeable on their combined social welfare and rental income up to €18,300.

In the case of a married couple with one earner who is unemployed, the position would be that they would need to be in receipt of net rental income of close to €10,000 before income tax would be payable. I believe it is unlikely that the letting of a property in Dublin city will give rise to net rental income of these amounts. For these reasons, I will not be accepting the amendment.

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