Written answers

Thursday, 21 March 2013

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance the amount of money that would be raised in a full year by reducing the level at which persons and companies may claim interest repayments against tax for residential rental properties to 40%; and if he will make a statement on the matter. [14459/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Minister for Finance ( Mr Noonan) : I am informed by the Revenue Commissioners that a breakdown between rent received from residential property and other types of property is not sought or provided in tax returns. However based on personal income tax returns filed by non-PAYE taxpayers for the year 2010, the latest year for which this information is available, and making certain assumptions about the data it is estimated that the revenue that would be raised from reducing the level at which individuals can claim interest repayments against tax for residential rental properties from 75% to 40% could be in the region of €157m. Rental income of companies is returned as net of interest on borrowings the figures for interest are not separately distinguished in corporate tax returns. There is, therefore, no basis on which an estimate of the cost of reducing the tax relief involved could be provided.

The estimated cost of 2010 residential interest relief 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. This figure is 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 figure provided in this reply in respect of individuals.

The level at which interest repayments can be claimed against tax for residential rental properties was reduced from 100% to 75% in section 5 of the Finance Act 2009.

There is no specific proposal in the Programme for Government to decrease the amount of interest on borrowings that can be offset against rental income for tax purposes, however, as a matter of course all such taxation measures and reliefs are considered in the context of the budgetary process.

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