Tommy Broughan (Dublin Bay North, Independent)
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332. To ask the Minister for Finance if consideration will be given to introducing a site value tax and its possible yield; and if he will make a statement on the matter. [26120/16]

Michael Noonan (Limerick City, Fine Gael)
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The 2012 report of the Inter-departmental Group on the Design of a Local Property Tax (the "Thornhill Group") comprehensively examined the basis of assessment for the Local Property Tax (LPT), including both the taxable value of the property option and a site value tax (SVT). The report favoured the use of market value of residential properties as the basis of assessment and this  recommendation was accepted by the Government.

The Thornhill Group concluded that the arguments for SVT were outweighed by the likely difficulties in ensuring acceptance by taxpayers, i.e., arriving at values that were evidence based, understandable and acceptable to the public in addition to complexities and uncertainties in the valuation effort necessary to put an SVT in place. In contrast, the Group considered that under a market value approach applied to housing, the market value of a residential property would be related to the characteristics of the building itself, the site on which it was located and the characteristics and amenities of the neighbourhood. There would be a relationship between the market value of a house and benefits to the owners in terms of enjoyment of the amenity value of the properties.

At the request of the Minister for Finance, the operation of the LPT was reviewed in 2015 by Dr. Thornhill. A number of submissions to the review favoured changing the basis of determination of LPT liabilities to site value, floor area or variations thereof. Dr. Thornhill considered these but remained of the view that market value is the most appropriate and equitable basis on which to determine LPT liabilities.

Both Commissions on Taxation in 1985 and 2009 favoured property taxation based on market value citing inter alia significant difficulties in communicating to home-owners and land-holders the nature of the taxation charge that is involved and the benefits that would accrue from that change.

I have no plans to introduce a Site Value Tax.

Tommy Broughan (Dublin Bay North, Independent)
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333. To ask the Minister for Finance the work being completed by his Department to increase taxes paid by landlords who own two to five rental properties, five to ten rental properties, ten to 20 rental properties and 20 or more properties, in tabular form; the projected yield to the Exchequer of any increases to such tax; and if he will make a statement on the matter. [26121/16]

Michael Noonan (Limerick City, Fine Gael)
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It is widely accepted that the residential rental property market is currently under strain, with rents in many areas now exceeding the previous pre-financial crisis peak.  The Programme for a Partnership Government contains a range of tax and non-tax measures aimed at boosting supply of social and private housing in order to alleviate the housing shortage, and thereby improve sustainability for both tenants and home owners.

Residential landlords are an important element of a functioning property market.  Landlords are liable to tax on the rental profits earned. A landlord may claim a deduction for costs incurred in respect of the property 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.  This deduction may increase to 100% of interest paid where the terms of the incentive for landlords who make their property available for a minimum of three years to tenants in receipt of social housing supports are met.

The method for calculating a landlord's net rental profit does not vary in proportion to the number of rental properties a landlord has.  My Department is not undertaking an analysis of such a proposal, and nor do I see a policy rationale for doing so.  Income tax rates and bands are generally applicable and are determined by factors such as a taxpayer's personal circumstances and taxable income from all sources.  To impose a higher rate of tax in respect of a number of sub-sets of taxpayer with income from a particular source would be highly unusual, and could be open to challenge under state aid rules.  In addition, it is likely that the charging of higher taxes of the nature contemplated by the Deputy would ultimately be passed on to tenants in the form of further increases in rents.

Furthermore, Ireland's residential property market has traditionally been characterised by a multitude of part-time private landlords owning an average of 1 to 2 properties.  This concentrates risk for both landlords and tenants, and in my view a rental market which includes more professional, full-time, landlords should help to standardise and improve management standards across the rental property sector and, in the longer term, lead to a more sustainable and secure residential property market for both investors and property tenants.