asked the Minister for Finance whether citizens availing themselves of the right to purchase the fee simple of their ground rents will be liable to Schedule A property tax; and what annual tax would be involved in the case of an annual ground rent of £10, £15 and £20, respectively.
Ceisteanna — Questions. Oral Answers. - Liability to Property Tax.
16.
I assume the Deputy has in mind the owner-occupier of residential premises who purchases the fee simple of his property under the Landlord and Tenant (Ground Rents) Act, 1967.
As the amount of the ground rent would no longer be deductible, in general, such persons would effectively incur increased liability to tax under Schedule A in relation to their residences to that extent. However, where an owner-occupier financed the purchase of the fee simple by borrowing, his total income for tax purposes would be reduced by the interest paid on the borrowing.
I did not catch the import of the first part of the Minister's reply. Do I take it that unless he borrows the money to purchase the fee simple ——
At the moment he pays Schedule A tax on his valuation, but he is allowed to deduct the ground rent before arriving at the amount which he pays. If he is no longer paying ground rent, that deduction is no longer available to him, so to that extent the Schedule A assessment would be increased. However, most owner-occupiers who would be attempting to buy out their ground rent would be borrowing the money to do so, and the interest they would pay on the borrowed money would be set off against their income.