Pearse Doherty (Donegal, Sinn Fein)
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107. To ask the Minister for Finance the estimated revenue that would be raised by reducing mortgage interest deductions against rent for landlords from 75% to 0%, 10%, 20%, 30%, 40%, 50% and 60%, excluding cases in which a 100% interest deduction is allowable in respect of residential property which is let for a period of three years to a tenant or tenants in receipt of certain social housing supports. [14873/17]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by Revenue that it does not currently require rental income to be returned in a manner that would enable private residential rental accommodation income, reliefs and allowances to be separately identified from income, reliefs and allowances in respect of commercial rental property.

I assume that the cases the Deputy is suggesting would be excluded from the proposed reduced mortgage interest deductions are those in receipt of rental income in respect of residential property that is let for a period of three years to a tenant or tenants in receipt of certain social housing supports and which qualifies for the social housing tenancy incentive introduced in Finance Act 2015.  This incentive works on the basis of allowing qualifying landlords to claim additional interest relief, up to 100% of qualifying interest, on an arrears basis at three-yearly intervals, subject to meeting the required criteria.  The first claims are therefore due to be submitted in 2019, in respect of qualifying lettings in the period 2016 to 2018, so it is not yet possible to separately identify these cases and the rental income arising therefrom.

It is not therefore possible to provide the annual yield to the Exchequer that would be raised by reducing mortgage interest deductions to a range of different levels, while retaining 100% interest relief for qualifying social housing tenancies, as outlined by the Deputy. 

Notwithstanding the above, the estimated cost for the phased restoration of 100% mortgage interest deductibility for residential landlords, introduced in Finance Act 2016, may be of assistance. The deduction will be increased by 5 percentage points each year, with the first increase from 75% to 80% having taken effect from 1 January 2017.  Based on personal Income Tax returns filed for the year 2014, the latest year for which this information was available, and making certain assumptions about the data, it was estimated that the full-year cost of the 2017 increase from 75% to 80% deductibility will be €14 million, and the full-year cost of the restoration from 75% to 100% by 2022 will be €70 million. Extrapolating from these estimates, a reduction in the allowable deduction for mortgage interest for all residential landlords from the current position of 80% to 0%, 10%, 20%, 30%, 40%, 50% and 60% could yield in the order of €224 million, €196 million, €168 million, €140 million, €112 million, €84 million and €56 million respectively.