Peadar Tóibín (Meath West, Sinn Fein)
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99. To ask the Minister for Finance if he has or will put in place a tax break for families who have outgrown their current home or have had to move in order to work (details supplied); if there is legislation pending to provide assistance to those in negative equity who have no other means to exit their unsuitable domiciliary situation.; and if he will make a statement on the matter. [41310/13]

Michael Noonan (Limerick City, Fine Gael)
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Finance Act 2009 introduced a cap of 75% on the amount of interest on loans used to purchase, improve or repair rented residential property, that can be deducted in computing rental profit for tax purposes. The restriction applies to interest accruing on or after 7 April 2009. It does not apply to loans in respect of rented commercial property. I am advised by the Revenue Commissioners that rental profit for tax purposes is the gross rental income less allowable expenses incurred in earning that rent. In computing the amount of rental profit, only those deductions that are specified in section 97(2) of the Taxes Consolidation Act 1997 are allowable as deductions against the gross rental income. 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;

- 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 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 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.

As regards any changes, the Deputy will be aware that it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

The Central Bank has advised me that, while the levels of interest and take up have been low, a number of institutions have trade up/trade down products to assist their customers in such circumstances. The two most important criteria for assessing the suitability of a negative equity mortgage product in a particular case is its affordability and sustainability. The Central Bank advises that, when assessing a negative equity mortgage proposal, lenders should be cognisant of their obligations under the Consumer Protection Code regarding these matters as well as, if appropriate, the Code of Conduct on Mortgage Arrears. There are no proposals at this time for further legislative development in this area.