Liam Lawlor
Question:163 Mr. Lawlor asked the Minister for Finance if he will consider amendments to the tax treatment of the private rented accommodation sector in view of the low level of confidence for the future of this sector. [5823/00]
Written Answers. - Tax Code.
The position in relation to the tax treatment of the private rented accommodation sector is that the Finance (No. 2) Act of 1998 abolished the deductibility of interest for borrowings in respect of private rented residential accommodation pur chased on or after 23 April 1998, subject to certain transitional provisions. The Act represented a significant part of the Government's package of measures aimed at addressing problems in the housing market. This approach was adopted on the basis of the report on house prices prepared by Peter Bacon and Associates.
The measures in the Act were framed to address the situation identified in the report that investors were to some extent replacing first time buyers in the market, a development which is totally contrary to the thrust of housing policy over recent decades. The evidence since the Act was passed is that it has been successful in this aim. Restoration of tax relief for private landlords in respect of provision of private rented accommodation would result in a reversal of the improvement in the position of first time buyers brought about by the Finance (No. 2) Act of 1998.
A further study by Peter Bacon and Associates to assess the impact of the Government action on house prices in 1998 included an assessment of the impact on the market for private rented residential accommodation. This report, which was published last year, did not recommend the restoration of deductibility of interest on borrowings undertaken for investment in residential property.
In view of the considerations outlined above, I do not propose to make any changes to the tax treatment of the private rented accommodation sector.