Martin Heydon (Kildare South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

147. To ask the Minister for Finance his plans to review the taxation position of residential landlords, in view of the recent reports that up to 30% of landlords are considering selling their properties and getting out of the rental market, due to the excessive charges and taxes that are being levied on rental income, and the reduction in reliefs for mortgage interest; and if he will make a statement on the matter. [19759/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is not clear from the question what excessive charges and taxes the Deputy is referring to.

However, in relation to the taxation of rental income, I am informed by the Revenue Commissioners that rental income for tax purposes is the gross rental income less allowable expenses incurred in earning that rent, as specified in section 97(2) of the Taxes Consolidation Act 1997. 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 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 Private Residential Tenancies Board registration requirements for all tenancies that existed in relation to the property in the relevant year); and

- the payment of local authority rates.

In addition, capital allowances in respect of wear and tear are available in relation to 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 aware of course that recent reports on the private rental sector have stated that, among other things, the restriction on the amount of interest that is deductible from gross rents from residential property and the lack of a deduction for local property tax (LPT) are impediments to securing long term investment in good quality rental homes.

As regards the former issue, the Deputy is no doubt aware that this measure was introduced in the April 2009 supplementary budget in respect of all residential lettings as part of an urgent revenue-raising package aimed at stabilising the public finances.  

The Deputy will also be aware from responses to previous Parliamentary Questions that the Government agreed in principle to accept the recommendation of the Inter-Departmental Group on the design of a local property tax that LPT be treated as a deductible expense in calculation of a landlord's taxable income, but has not, as yet, decided on the manner in which this will happen or its timing.