Michael D. Higgins
Question:185 Mr. M. Higgins asked the Minister for Finance the amounts claimed in tax relief by landlords on interest payments under various Finance Acts since 1997; and if he will make a statement on the matter. [19278/02]
Written Answers. - Tax Reliefs.
Section 1 of the Finance (No. 2) Act, 1998, provided that interest on borrowed money employed on or after 23 April 1998 in the purchase, improvement or repair of a rented residential premises within the State could not be offset against rental income in arriving at the taxable rent or allowable loss in respect of that premises. This restriction did not apply to interest on borrowed money employed before 31 March 1999 in the purchase of such premises under a contract entered into before 23 April 1998 or in certain other transitional situations. The section also applied to interest on borrowings in respect of investment in rented residential properties outside the State from 7 May 1998. This continued to be the position until the beginning of this year when interest relief as a deductible expense in calculating tax on rental income from residential property was restored with effect from 1 January 2002.
Figures of loan interest allowable on borrowings taken out for investment in house property are not separately identified in tax statistics, and it is not therefore possible for the Revenue Commissioners to estimate accurately the cost of the availability of interest relief to the landlords of rented residential property. The only indicative information available on the cost of the tax relief are tentative estimates which were compiled when the relief was abolished in 1998 and restored in 2002. It was tentatively estimated at the time of its abolition in 1998 that removing the relief would provide a saving to the Exchequer of €33 million, £26 million, in a full year, while its restoration in 2002 was estimated to cost €50 million in a full year.