Brian O'Shea (Waterford, Labour)
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Question 134: To ask the Minister for Finance his views on the mortgage interest relief situation of a person (details supplied) in County Wexford; and if he will make a statement on the matter. [21519/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Section 5 of the Finance Act 2009 was amended whereby the level of tax relief investors can claim on the interest for mortgages and loans on residential rental properties was reduced to 75% of the interest accrued from 7th April 2009. This measure was introduced at a time when mortgage interest rates were at historical lows and the repayment burden on investors had been reduced significantly. The fact that rents are falling, after a number of years of strong growth was taken into consideration in framing the supplementary Budget 2009 and on this basis it was decided to reduce rather than abolish this relief. It should be borne in mind that ordinary workers on relatively modest incomes are being asked to make additional contributions to help with the recovery in public finances and it is felt that it is fair and equitable that residential investors contribute a proportionate share of the burden of adjustment needed in this economy.

Under the provisions of the Tax Acts, a person in receipt of rental income is assessed to income tax on the net amount of the rents received (i.e. the gross rents less allowable expenses incurred in earning those rents). In computing the net amount of the rents received, only those deductions that are specified in section 97(2) of the Taxes Consolidation Act 1997 are allowable. The main deductible expenses are: Any rent payable by the landlord in the case of a sub-lease; The cost to the landlord of any goods provided or services rendered to a tenant; The cost of maintenance, repairs, insurance and management of the property; Interest on borrowed money used to purchase, improve or repair the property; and Payment of local authority rates in the case of rateable properties used for commercial purposes.

As payment of the new local authority charge for residential properties is not included on the list of allowable deductions, it is not an allowable expense in computing taxable rental income. As is normal practice the tax treatment of interest payments on loans for rented residential property together with all other taxation issues will be given due consideration in the context of ongoing budgetary and taxation policy.

Paul Kehoe (Wexford, Fine Gael)
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Question 135: To ask the Minister for Finance, further to Parliamentary Question No. 51 of 28 January 2010, the reason the mortgage holder's full entitlement was reinstated; the basis on which the figures were arrived at; and if he will make a statement on the matter. [21522/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that initially the person concerned took out a new mortgage in 2003. A further new mortgage was taken out in 2007. Immediately prior to the 2010 Finance Act, mortgage interest relief was only available for a maximum of seven tax years. On that basis, the person concerned ceased to be granted mortgage interest tax relief at the end of 2009, covering the seven tax years 2003-2009 inclusive. When the precise status of the 2007 mortgage was clarified by Revenue in January 2010, following contact with the person concerned, Revenue determined that relief was due on that mortgage. It was on that basis therefore, that the entitlement was reinstated by Revenue.