Catherine Murphy (Kildare North, Social Democrats)
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81. To ask the Minister for Finance the number of individual landlords and investment companies that are availing of tax relief for landlords; and if he will clarify if non-resident individuals and investment companies are eligible to avail of the tax relief. [15637/23]

Michael McGrath (Cork South Central, Fianna Fail)
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A significant array of reliefs and exemptions are available for landlords. I assume that the Deputy's question reflates to sections 97 and 97A of the Taxes Consolidation Act 1997 (TCA), which sets out the allowable deductions in computing rental income chargeable to income tax or corporation tax under Case V of Schedule D. Income chargeable under Case V is computed on the gross amount of rent receivable less allowable expenses incurred in earning that rent. I am advised by Revenue that non-resident individuals and corporate landlords are also eligible to make these deductions on their Irish rental income.

After deduction of allowable letting expenses, rental income is subject to tax as 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. Subject to limited exceptions, in computing tax due, non-resident individuals are not entitled to personal tax credits. Corporate landlords are liable to corporation tax at 25% on Case V income, and a further 20% “close company surcharge” may also apply where the rental profits are held within the company.

Some examples of deductible expenses for landlords include the cost of maintenance, repairs, insurance and management of the property; property management fees; the cost of registering a residential tenancy with the Residential Tenancies Board; the cost of letting, such as letting agency fees; and the cost to the landlord of any goods provided or services rendered to a tenant.

The amount of mortgage interest which was allowed as a deduction was restricted to 75 per cent from 2009, rising to 80 per cent in 2017 and 85 per cent in 2018. With effect from 1 January 2019, the full amount of interest on mortgages for residential rental properties may be deducted.

Wear and tear allowances are available in respect of furniture, fixtures and fittings provided by a landlord. These allowances are granted at the rate of 12.5% per annum over a period of 8 years.

The owners of rental properties are also entitled to claim deductions up to €10,000 against rental income from that premises for various expenses incurred prior to it being first let after a six-month (decreased from 12 months in Finance Act 2022) period of non-occupancy (increased from €5,000 in Finance Act 2022). These expenses include any rent payable in respect of the premises, general repairs and maintenance (capital expenditure excluded), insurance and management fees, rates, service charges, accountancy fees and certain mortgage protection policy premiums.

Finance Act 2022 also provided for the deduction of certain retrofitting expenses incurred by landlords on rented residential properties with tenants in situ. The expenses that qualify for deduction are those in respect of which the landlord has received a home energy grant from the Sustainable Energy Authority of Ireland (SEAI).

I am informed by Revenue that the number of taxpayer units which have made a return of Schedule D Case V income for residential properties situated within the State in 2020 through a Form 11 tax return is 158,300. This is the most recent year for which data are currently available. Of those taxpayer units, 152,900 have claimed at least one allowable deduction from their gross rental income for the purposes of determining their net Schedule D Case V income. Revenue advises that 18,900 of these taxpayer units were otherwise non-resident for tax purposes.

In terms of company returns, I am advised by Revenue that the number of companies with gross rental income returned on Corporation Tax returns for 2021, the latest year available, is 14,567. 5,577 of these returned rental income in respect of residential properties. 11,592 availed of at least one deduction in respect of this income with 4,541 using at least one deduction in respect of residential income. The number of these companies trading in the state using a branch or an agency is 128 for companies returning any rental income and 54 operating using a branch or an agency with residential income only.

It should be noted that funds such as Irish Real Estate Funds (“IREFs”) and Real Estate Investment Trusts (“REITS”) are not included in these figures as they are exempt from Corporation Tax. Specific tax rules apply to the taxation of REITs and IREFs.