Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank Deputy Donohue for raising this matter on which the Minister for Finance has asked me to respond. The Deputy is correct that to qualify for mortgage interest relief an applicant must live in the property and may not rent it out. Those in receipt of mortgage interest relief who choose to rent out a property immediately lose the relief. I would be interested to learn when the mortgages to which the Deputy refers were taken out. As he will be aware, the maximum period for which one can obtain mortgage interest relief is now seven years. If, in the cases to which the Deputy refers, the individuals took out a mortgage five years ago, they will receive mortgage interest relief for only two more years.

As the Deputy is also aware, in last year's budget the Government introduced an increase in support through mortgage interest relief to help people who purchased a property between 2004 and 2008. Perhaps the Deputy will clarify when the persons to whom he refers purchased their homes. If, for instance, they purchased their homes five years ago, they will only receive mortgage interest relief for a further two years and it would not make a significant difference if they were to lose it at this stage. If they purchased their homes between 2004 and 2008, I presume they will be in receipt of the maximum relief of 30%, which was introduced by the Minister for Finance last year.

I will skirt through the written reply provided. Mortgage holders who are in difficulty with their mortgage obligations in respect of their primary residence have significant protections available to them under the Central Bank's code of conduct on mortgage arrears. The banks have signed up and are obliged to enforce the code of conduct. In addition, in October 2012 the Government published the report of the interdepartmental working group on mortgage arrears, known as the Keane report.

The Government remains committed to progress measures to assist genuine mortgage holders in difficulty and the Government committee on mortgage arrears, which is chaired by the Taoiseach, continues to meet. It is the intention of Government to ensure that those mortgage holders in genuine difficulty will receive appropriate assistance and a high priority has been assigned by Government to the implementation of this broad range of measures to assist those experiencing difficulty on their mortgage across the relevant Departments and agencies.

With specific reference to mortgage interest relief, as the Deputy will be aware, the relief is available at varying rates and subject to certain ceilings in respect of interest paid by an individual on a loan used by that individual for the purchase, repair, development or improvement of his or her sole or main residence. The Government is committed to helping address the particular problems faced by those who bought homes at the height of the property boom between 2004 and 2008. Mortgage holders qualify for the increased rate of 30% if they made their first mortgage interest payment in the period from 2004 to 2008.

Mortgage interest relief for principal private residences will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018. This means the loan will have to be drawn down by 31 December 2012 to qualify for this relief.

Given the current budgetary constraints, the Minister for Finance has no plans to widen the scope of the relief to cater for people who are renting out their property, as the measure would become less targeted and very costly. However, it should be noted that an individual who rents out his or her residential property may be allowed a deduction, subject to certain conditions, in computing the taxable rents from that letting of 75% of the interest accruing on money borrowed to purchase, improve or repair that property. In arriving at the profit rent for tax purposes, 75% of the interest paid may be set against the gross rent. However, it should also be noted that where the landlord has not complied with the registration requirements of the Private Residential Tenancies Board in relation to all tenancies that existed in the particular premises for the relevant tax years, none of the interest paid may be set against the gross amount.

As the Deputy will appreciate, the Minister for Finance receives numerous requests for the introduction of new tax reliefs and the extension of existing reliefs every year. He will also appreciate that the Minister must be mindful of the public finances and the many demands on the Exchequer. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.

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