Róisín Shortall (Dublin North West, Independent)
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To ask the Minister for Finance if it is the case that the payment of either national or sub-national property taxes in respect of a property that is owned by an Irish resident but rented out in a foreign jurisdiction can be used to reduce the income tax bill arising from the rental income from the property; and his estimate of the cost of this provision to the tax-payer in the past year for which figures are available [16978/13]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that their published practice, in relation to foreign rental property states that a property or ownership tax cannot be claimed as a deduction or a credit against any Irish tax liability arising on rents arising from the letting of foreign property. All the relevant details can be found on the Revenue website . Taxable rental income from foreign rental property is generally calculated in the same way as taxable rental income from Irish property, with the same deductions and allowances being available.

In that regard, the main deductible expenses available in respect of Irish rental property, as provided for in the Taxes Consolidation Act 1997, are:

- any rent payable by a landlord in the case of a sub-lease;

- the cost to a landlord of any goods provided or services rendered to a tenant;

- the cost of maintenance, repairs, insurance and management of the property;

- the interest paid on borrowed money used to purchase, improve or repair the property (which, in the case of residential property, is restricted to 75% of the interest); and payment of local authority rates.

In addition, wear and tear capital allowances are available in respect of the capital 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 am further advised by the Commissioners that credit against Irish income tax for property tax paid in respect of property located in a foreign jurisdiction is not available under our double taxation treaties. In the first instance, credit under a tax treaty is only available in respect of taxes listed in the treaty, and most of Ireland's treaties cover income and capital gains, but not capital taxes. Secondly, in the relatively small number of Irish tax treaties (less than one in seven) that include provisions on the avoidance of double taxation with respect to capital, the principle adopted by the OECD that credit is to be allowed for income tax only against income tax, and for capital tax only against capital tax, is followed. This means that, in those tax treaties that itemise property tax in the foreign jurisdiction in the list of taxes covered by the treaty, the double taxation relief provisions in each provide that credit for the property tax will not be given against income tax in Ireland.