John Browne (Wexford, Fianna Fail)
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207. To ask the Minister for Finance the reason private landlords are not allowed tax deductibility of local property tax and are treated differently to commercial landlords in relation to tax deductibility of rates particularly as he has given a firm commitment to accept the recommendation from the expert group that local property tax should be an allowable expense for private rental income; and if he will make a statement on the matter. [4068/14]

Michael Noonan (Limerick City, Fine Gael)
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Commercial rates, which are deductible for tax purposes against rental income, are levied by local authorities on property used for commercial purposes; as commercial rates are not payable in respect of residential property, which is instead liable to Local Property Tax (LPT), there is no distinction in the liability of landlords to LPT.

The inter-departmental group, chaired by Dr Don Thornhill, set up to consider the design of a property tax (the Thornhill Group) recommended that the Local Property Tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.

The Thornhill Group recognised the considerable pressures on the public finances and the need to bridge the gap between expenditure and revenue, and, for this reason, suggested that consideration be given to phasing in deductibility over a period of years.  The group also considered that it was for Government, having regard to the prevailing budgetary situation, to decide on the time span for phasing-in deductibility and on what percentage of LPT to allow as a deduction from gross rents for tax purposes.

The Government accepted the recommendation of the Thornhill Group in principle, but has not considered the manner or the timing in which this will happen.