Michael McGrath (Cork South Central, Fianna Fail)
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Question 97: To ask the Minister for Finance the reason tax relief on rent paid does not apply to local authority tenants; and if he will make a statement on the matter. [12692/11]

Michael Noonan (Limerick City, Fine Gael)
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Section 473 of the Taxes Consolidation Act, 1997 provides tax relief at the standard rate to individuals who pay for private rented accommodation that is used as their sole or main residence. The level of rent qualifying for rent relief depends on an individual's marital status and age. In Budget 2011, it was announced that rent relief was being withdrawn on a phased basis. No new claimants are allowed from 7 December 2010 and existing claimants will continue to receive the relief on a reducing basis, with a complete cessation of the relief from 2018. The maximum tax credit available under the scheme in 2011 is €1,280/€640 per annum for a married couple/individual over 55 years of age and €640/€320 for a married couple/individual under 55 years of age.

However, tax relief is not available on rent paid in the following circumstances:

Tenancies held from Local Authorities, Government Departments or the Office of Public Works

A tenancy for a freehold estate or interest, or a tenancy for a definite period of 50 years or more and

Tenancies in relation to which there us an agreement that the rent paid may be treated as a consideration or part consideration for the purchase or future purchase of the property.

Rent relief is not available for Local Authority tenancies because these rents are, in effect, subsidised. Tenants pay rents which are calculated with reference to household income and ability to pay. In practice, the level of rent is well below the prevailing market rent. Furthermore, among the other advantages which local authority tenants enjoy are greater security of tenure vis-À-vis the wider rental sector and the right to buy the property at a marked discount.