Kevin Humphreys (Dublin South East, Labour)
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Question 62: To ask the Minister for Finance the tax relief available to landlords on mortgage interest, for rental income from tenants of commercial property; the cost of this in 2010 and 2011; and if he will make a statement on the matter. [26184/12]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that landlords may deduct interest on money borrowed to purchase, improve or repair commercial property from the gross rent when computing their rental profits for tax purposes on that property. Interest incurred before the first occupation of the property by a tenant for the purposes of a trade or undertaking, or between lettings, is not deductible.

I am also informed by the Commissioners that the information provided for interest relief for rental property is based on claims for such relief on all rental properties included in personal income tax returns filed by non-PAYE taxpayers declaring interest on borrowings to be offset against rental income assessable under Case V, Schedule D. It is not possible to separately identify how much of this cost is associated with commercial property.

Based on personal income tax returns filed by non-PAYE taxpayers for 2010, the latest year available, the amount of tax foregone by allowing a deduction for interest on borrowings to be offset against all rental income assessable under Case V, Schedule D for both residential and commercial property is estimated at €660 million.

This estimate is based on assuming that tax relief was allowed at the top income tax rate of 41% and the figure provided could, therefore, be regarded as the maximum Exchequer cost in respect of those taxpayers. I am advised by the Revenue Commissioners that they are not in a position to provide data for 2011 as the tax returns for that year are not yet due. The figures for 2010 are subject to adjustment in the event of late returns being filed or where returns already filed are subsequently amended.

It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return form 12 is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete an income tax return form 11. This return is the source of the figures provided in this reply.