Written answers

Tuesday, 6 November 2012

Department of Finance

Property Taxation

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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To ask the Minister for Finance if in the context where people have a number of apartments where they are compelled to pay the home tax levy on each apartment and the household charge on each apartment, if he will consider allowing these as illegitimate deductible expenses as charges on the business, particularly when the holding of such properties are pure business with no other source of income available to the person who owns them; and if he will make a statement on the matter. [47954/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am assuming that the reference to the “home tax levy” is a reference to the Non Principal Private Residences (NPPR) charge payable under the Local Government (Charges) Act 2009. I am informed by the Revenue Commissioners that a person in receipt of rental income is assessed to income tax on the profit amount of the rents received (i.e. the gross rents less allowable expenses incurred in earning those rents). In computing the profit 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 paid on borrowed money used to purchase, improve or repair the property (in the case of residential property, the deduction is restricted to 75% of the interest and is subject to compliance with PRTB registration requirements for all tenancies that existed in relation to the property in the relevant year); and

- payment of local authority rates in the case of rateable properties used for commercial purposes.

In addition, wear and tear allowances are available in respect of expenditure incurred on fixtures and fittings provided by a landlord for the purposes of furnishing rented residential accommodation. These allowances are granted at the rate of 12.5% per annum of the actual cost of the fixtures and fittings over a period of 8 years. I have no plans to amend the deductible expenses to include the home tax levy or the household charge.

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