Tommy Broughan (Dublin Bay North, Independent)
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335. To ask the Minister for Finance the measures he is taking to assist accidental landlords, owners of one or two properties who may have been affected by negative equity mortgages and are renting a property to assist with mortgage payments; the reliefs that can be applied to such cases; the cost of such an initiative to the Exchequer; and if he will make a statement on the matter. [26123/16]

Michael Noonan (Limerick City, Fine Gael)
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In referring to "accidental landlords" I understand the Deputy is referring to property owners in negative equity who have moved to alternative accommodation as a result of factors such as a growing family or change in work location, while letting out their own mortgaged property to other tenants.

Some accidental landlords may not have felt in a position to sell their property because they were in negative equity and a sale would crystallise the loss.  However, I would point out that the number of mortgages in negative equity is reducing. As noted in the Spring Quarterly Economic Commentary published by the ESRI, the numbers of mortgages in negative equity has fallen below 100,000 for the first time since 2008. This figure had been above 300,000 in 2011.

With regard to the taxation of rental income, the Deputy will be aware that landlords are liable to tax on their net rental profit after deduction of allowable letting expenses, and not on the gross rental income received. A landlord may be allowed a deduction of 75% of the interest paid on borrowed money used to purchase, improve or repair rented premises when calculating rental income. This deduction may be increased to 100% of mortgage interest where the property is let to a tenant in receipt of social housing supports, under the terms of the incentive I introduced in Finance Act 2015.  A number of other allowances and deductions are also available to reduce the taxable rental profit, including the cost of maintenance, repairs, insurance and management of the property, and the cost to the landlord of any goods provided or services rendered to a tenant.

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.

It should also be noted that as the taxation of all rental property in the State is dealt with under the same legislation, an attempt to carve out a cohort of 'accidental' landlords would prove problematic. There are many reasons why individuals might choose, or feel obliged, to let out a property which they own while also renting a separate property for their own accommodation, and all are treated equally by the tax system.  The provision of additional tax deductions to one sub-set of landlords could also create difficulties in the rental marketplace as a result of the advantage obtained over other landlords of similar residential property.