Written answers

Thursday, 26 February 2015

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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61. To ask the Minister for Finance if he will provide a report which outlines the cost to the Exchequer of providing a €6,000 housing cost tax credit; his views that the housing cost tax credit should be assigned to any person who in providing a principal private residence for them, or their family, has engaged in a lease or mortgage; that this housing cost tax credit would replace the current mortgage interest relief scheme and remaining claims for tax relief on rent; and if he will make a statement on the matter. [8579/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that the projected cost of mortgage interest relief and rent relief in 2015 is approximately €275m and €50m respectively. It should be noted that both of these credits are no longer available for new claimants. Mortgage interest relief is not available for homes purchased on or after 1 January 2013 and rent relief has not been available for new claimants from 8 December 2010. The relief for pre-existing claimants is being be phased out with both schemes scheduled to finish at the end of 2017.

It is not possible to estimate the cost to the Exchequer of providing the €6,000 housing tax credit outlined by the Deputy as there is insufficient detail as to how such a credit would work. For example, is the proposed tax credit an annual allowance or a once-off lifetime credit? In addition, it is not clear how the proposed credit would interact with mortgage interest relief already claimed, for example, how would it apply where a person has already received mortgage interest relief for one year, compared to someone who has claimed it for six years. These variables would affect the estimation of cost over a period of time.

I would have concerns about the introduction of such a credit in terms of the possibility of its value being absorbed by landlords, resulting in no gain for tenants. Similarly, the availablity of such a credit could act to encourage lenders to charge higher rates of interest on home loans. In addition, it should be noted that tax credits are only of value to those who are liable to income tax. In this regard, the Deputy may wish to note that it is estimated that approximately 38% of income earners will not have a liability to income tax in 2015.

If the Deputy wishes to scope out the proposal in greater detail my officials in conjunction with Revenue will see if they can provide an estimate of the cost of the proposed credit.

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