Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

Landlords are an essential feature of a functioning housing market. Rising rents are driven by a shortage of supply so stabilising and increasing the supply of rental properties should ease upward pressure on rental prices and make it easier for prospective tenants to find affordable homes.

The new residential premises rental income relief is a tax relief at the standard rate of 20% against private rented residential income. The purpose of this relief is to provide an incentive for landlords, specifically targeted at attracting and retaining small-scale landlords in the private sector. The relief will be targeted, with €3,000 in the tax year 2024, €4,000 the following year and €5,000 in 2026 and 2027. This will equate, in effect, to a tax credit of up to €600 in year one, €800 in year two and €1,000 in years three and four. The relief is capped at the individual’s tax liability on rental income from residential property.

The risk of deadweight was considered as part of the process of creating this relief and it was determined, as with most tax reliefs, that there is a risk of deadweight. However, I believe that on balance this measure is worth implementing and is necessary to retain small-scale landlords in the rental market. To mitigate the issue of deadweight as much as possible, this relief is targeted and is only available for the tax years 2024 to 2027, is capped at the individual’s tax liability on rental income from residential property and relates only to tenancies registered with the Residential Tenancies Board or where a landlord leases a property to a public authority.

In terms of social equity, Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country, which contributes to the redistribution of income and to the reduction of income inequality. My Department undertook a distributional analysis of the tax and welfare measures announced in budget 2024, which demonstrated that the overall core budget package was progressive.

See this speech in context