Averil Power (Fianna Fail) | Oireachtas source

I support Senator Mooney's amendments. I want to speak about PRSI on rental income. The Bill as drafted would require people to pay PRSI on income and not profit. While capital expenditure, mortgage interest, etc. can be deducted for income tax purposes before paying the income tax aspect of it, I understand the PRSI will need to be paid on income.

Let us not forget that the vast majority of landlords in Ireland have only one property. In 2011, some 135,000 landlords had only one property, compared with just over 1,500 who had more than ten. In the current environment many of those are young couples who separately bought properties during the boom and have since got married, but cannot live in either apartment. They are therefore renting out a family home from somebody else and paying rent on it while getting rental income from their two separate apartments.

These are people who were forced into becoming, what is often termed, "accidental landlords". They certainly never intended to be landlords but have no other choice. Many of those people are losing a fortune on their properties. They cannot afford to sell them because the negative equity is so significant and yet the rent coming in is far less than the mortgage repayments. These people are making a loss on a rental property but are doing their best to hold on to it and just tread water. Now they will be required to pay PRSI on that loss. Nobody can dispute the tax to be paid on a profit, but it is scandalous to have to pay tax on a loss particularly for people bringing in very small amounts of income. Multinationals can write off all kinds of stuff in different tax years. They are not even required to write it off in the same tax year; they can write it off in other tax years. How can the Government turn around to couples who are struggling with one rental property and tell them it wants to add to that burden in addition to property taxes and everything else they are now paying on that home by expecting them to pay tax on a loss?

I believe it is incredibly unjust and I urge the Minister to change that provision. At the very least the Minister should accept Senator Mooney's amendment whereby the PRSI would only be paid on income over €6,000. A typical rental property in Dublin would yield €7,000, €8,000 or €10,000, which at least would cover some of the income for them. As a matter of principle, I object to the provision on the rental income side. If it applied to rental profit, it would be fair enough. Applying it to income is objectionable. However, before tabling a stronger amendment to change it from income to profit, I want to hear the Minister's response to establish if my understanding is correct. Unlike the income tax provisions which justifiably allow for deductibles, the provision as drafted does not and will apply to all income regardless of whether the person is making a loss after paying mortgage repayments, letting fees, the PRTB fee and general maintenance costs. Ultimately they will be taxed on that loss.