Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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119. To ask the Minister for Finance if one of the tenants in common of a property involving two tenants in common can declare 100% of the rental income of the property for tax purposes in circumstances in which the other tenant in common is registered with the Revenue Commissioners for 40% of the rental income; and if he will make a statement on the matter. [47111/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that tenants in common hold a property in separate shares. The proportion of the property which each tenant in common holds will be specified in the deed which transferred ownership of the property to them. It appears on the basis of the information supplied that the tenants in common hold this property in unequal 60:40 shares, and presumably are entitled to any rental profits in the same ratio.

The Irish income tax system is based on self-assessment. Taxpayers are required to file tax returns stating their income and deducting any allowable losses, expenditures, reliefs, etc. Taxpayers are taxed only on income earned or profits/gains made in a taxable period. In this scenario, each tenant in common would be entitled to a share of the rental income in proportion with the share of the property they hold.

I am advised by Revenue that the proposal in the Deputy’s question, which would appear not to be in keeping with the terms of the relevant tenancy in common, would not be appropriate. The Taxes Consolidation Act 1997 does not provide that taxpayers can declare income, profits or gains to which they are not entitled; that one taxpayer would declare income which belongs to another taxpayer; or that taxpayer A would ask taxpayer B to declare income belonging to taxpayer A. It would not be correct for one tenant to declare 100% of the rental income from a property when she/he was only entitled to a share of such income, and for the other tenant not to declare income to which she/he was entitled, and for which she/he is liable to tax.

Also, if the tenants in common proceeded in the manner suggested, the tenant in common who did not declare any rental income may not be in a position to claim all the allowances, credits and reliefs to which she/he is entitled.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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120. To ask the Minister for Finance if there is a scheme of support for property owners that let out a property they are unable to sell due to negative equity in circumstances in which the rental income goes to servicing the mortgage but they still have to pay tax on the rental income; and if he will make a statement on the matter. [47112/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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There is no tax based scheme along the lines suggested by the Deputy.

Regardless of whether a property is in negative equity, the rental income of the property for tax purposes is the gross rent less the allowable expenses incurred in earning that rent, as specified in section 97(2) of the Taxes Consolidation Act (TCA) 1997.

The main deductible expenses are:

- any rent payable by the landlord in the case of a sub-lease;

- the cost to the landlord of any goods provided or services rendered to a tenant;

- the cost of maintenance, repairs, insurance and management of the property;

- the interest on borrowed money used to purchase, improve or repair the property (which, in the case of residential property, is subject to compliance with PRTB registration requirements for all tenancies that existed in relation to the property in the relevant year); and,

- payment of local authority rates.

From 7 April 2009 to 31 December 2016 landlords could claim a deduction of 75% of the interest payable on funds borrowed to purchase or improve a residential property against their rental profits. The percentage of interest allowed as a deduction for residential landlords was due to increase in 5% increments from 2017, until full deductibility was reached in 2021.

However, in Finance Act 2018, I provided for the restoration of full interest deductibility for all residential landlords. This measure took effect from 1 January 2019 and would be of benefit to many property owners in the position outlined by the Deputy.

In addition, wear and tear capital allowances are available in respect of the capital expenditure incurred on fixtures and fittings provided by a landlord for the purposes of furnishing rented residential accommodation.

The effect of the deduction of allowable expenses from gross rent means the amount of taxable rental income will often be substantially lower than the gross rent, and could, depending on individual circumstances, be nil, in which case no tax would be due on the rent.