Paschal Donohoe (Dublin Central, Fine Gael)
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In 2012 the inter-departmental group chaired by Dr Don Thornhill established to consider the structures and modalities of a property tax, recommended that Local Property Tax (LPT) paid by the owner in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates. The Group recommended that consideration be given to phasing in deductibility over a period of years having regard to the pressures on the public finances.

However, in his 2015 review of the LPT conducted at the request of my predecessor, Dr Thornhill considered that this recommendation in favour of deductibility does not rest easily with the concept of the LPT as a tax on the amenity value of residential properties rather than as a business cost. He contended that owners and tenants of rental properties both derive value from the amenity value of these properties, the owner in the form of the rent and the tenant from living in the property. This Dr Thornhill considered contrasts with the situation regarding local authority rates on commercial properties.  Owner occupiers are not allowed to claim LPT as a deduction against income tax and it is not appropriate on conceptual and equity grounds that they should.  There is a need to ensure equity between owners of all residential properties – whether owner occupiers or landlords.  Dr Thornhill recommended, after further reflection, that it would be inappropriate to allow LPT as a deduction against the taxation of income from rents on residential properties.

My Department will consider issues relating to the implementation of the outstanding recommendations in the 2015 Thornhill Review of LPT in due course in line with the 2019 revaluation timeline. The position of the Government will be made clear so that households will know well advance what its plans are for LPT. I expect the Department of Finance will commence work on this matter in the New Year in conjunction with the Departments of Public Expenditure & Reform, Housing, Planning & Local Government and Revenue.