Michael Healy-Rae (Kerry, Independent)
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304. To ask the Minister for Finance if he has plans to review and change the structure of the taxation system (details supplied). [12238/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The Government is acutely aware of the difficulties in the housing market at present. The Minister for Housing, Local Government and Heritage has primary responsibility for housing policy. As part of the Housing for All action plan update published last November, I understand that his Department will undertake a review of the private rental sector. I expect that this review will take into account the significant regulatory changes over the past several years and will ensure that our housing system provides an efficient, affordable, safe and secure framework for both landlords and tenants.

The exiting of small landlords from the private rental sector is a consequence of multiple factors. A changing regulatory environment which has been necessary to ensure a fair and effective residential rental sector that balances tenants' rights and landlords' responsibilities has resulted in a challenging compliance framework for some. The recent rise in house prices has also prompted some landlords to sell their rental properties. Fears of legitimate access to their properties without encumbrance arising future policy decisions have been cited by others.

In relation to landlords subject to income tax, rental income is part of the total taxable income of the landlord. Individual landlords may be subject to income tax at their marginal rate of tax in addition to which USC and PRSI will also apply.

I would make the point that there is already a range of tax-based measures in place to support private landlords. These measures include 100% mortgage interest relief, the new-retro-fitting allowance introduced in Finance Act 2022 and a number of other deductible expenses. For example, owners of rental properties are entitled to claim deductions of up to €10,000 against rental income from that premises for various expenses incurred prior to it being first let after a six-month period of non-occupancy.

As the Deputy will be aware, decisions regarding tax incentives and reliefs are normally made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. Tax reliefs, no matter how worthwhile in themselves, may serve to narrow the tax base and can make general reform of the tax system that much more difficult.

With that said, my Department continues to monitor all aspects of the property market, including the number of landlords in the rental sector, and I will continue to work with my colleagues in Government to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of housing in both the public and private sectors.