Catherine Murphy (Kildare North, Social Democrats)
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206. To ask the Minister for Finance if he has considered tax breaks for persons or families renting their unoccupied properties to a person or family with an identified social housing need or emergency housing need to facilitate the provision of housing in this current housing emergency; if any income assessment has been carried out where families do not benefit from renting properties as the cost in taxes due are too prohibitive; to identify a scheme where, if a family shows it is providing housing and covering costs and this is not considered as more cost beneficial to the State than the cost of emergency and hotel accommodation, his plans to develop an innovative scheme that will allow these unoccupied properties to be rented to a third party while being family-assessed for tax purposes where it does not cost the family to provide rental accommodation where mortgage payments plus taxes due on the income from rental are higher than actual rental income; the barriers he has identified to the provision of such a scheme; and if he will make a statement on the matter. [24360/16]

Michael Noonan (Limerick City, Fine Gael)
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Landlords are liable to tax on their net rental profit after deducting allowable letting expenses, and not on the gross amount of rental income received. A landlord may claim a deduction for other costs such as maintenance, repairs, insurance, management of the property and any goods provided or services rendered to the tenant.

A deduction for 75% of the interest paid on borrowed money used to purchase, improve or repair the rented premises is also allowed. In addition, the Deputy will be aware that in Finance Act 2015 I introduced a new relief to allow 100% mortgage interest deductibility for landlords who undertake, for at least three years, to provide accommodation to tenants in receipt of social housing supports. The relief is designed to improve the stability of housing supply to such tenants, and operates by means of an increase from 75% to 100% in the deductibility of mortgage interest against the landlord's rental income.

This relief was one element of an overall package of measures designed by the last Government aimed at stabilising rent and boosting supply in the housing market which, in my view, is the most appropriate and effective route to addressing rental price increases driven by supply constraints. The current Government is continuing this process and, in addition to a commitment to maintain the enhanced tax relief for landlords of tenants in receipt of social housing supports, the Programme for a Partnership Government also contains a number of non-tax commitments relating to increasing the supply of both social and private housing.

With regard to families with unoccupied properties, it would seem reasonable that in this situation it would normally be more beneficial to rent out the property where possible, even if the rent paid does not cover the relevant mortgage payment. If the property remained unoccupied, the mortgage payment would still have to be paid without the property generating any rental income. It should also be noted that in most cases a mortgage repayment contains a capital repayment element in addition to the interest cost.

To extend relief further to allow a deduction for the full interest and capital cost of a mortgage repayment in addition to other allowable letting expenses, as appears to be suggested in the Deputy's question, would in effect see the State further subsidise the purchase by a private individual of a residential rental investment property. I do not believe that this would be an appropriate use of State resources at this time.