Róisín Shortall (Dublin North West, Independent)
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78. To ask the Minister for Finance the saving to the Exchequer that would arise if the current arrangements for landlords, whereby they can claim interest repayments against tax for residential rental properties, was ceased for new entrants and the data upon which this estimate was based; and if he will provide similar details in respect of commercial properties. [44074/13]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that, subject to certain conditions, landlords may deduct 75% of the interest on money borrowed to purchase, improve or repair residential 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 2011, 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 €690 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. The figures for 2011 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.

The saving to the Exchequer from the termination of this tax relief for new claimants would depend on factors such as the numbers of individuals prepared to provide rental property in the current economic climate, the level of borrowings they would require and the extent to which the removal of the tax relief might be a disincentive to potential investors in this enterprise. As data on these factors is not available there is no basis on which an estimate of the potential yield from such a measure could be compiled.