In his speech the Minister outlined that the Bacon report would, hopefully, cause a dent in the market. When does he expect this dent to occur with further changes down the line?
Finance (No. 2) Bill, 1998 [Certified Money Bill] : Committee and Remaining Stages
Sections 1 and 2 agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
I read into the Official Report in the Dáil yesterday a few sentences from The Irish Times' property page which stated that all 35 houses in a west Dublin estate that came onto the market during the week had been sold to owner occupiers. The evidence is that the measures seem to have worked immediately.
Question put and agreed to.
Sections 4 to 16, inclusive, agreed to.
SCHEDULE.
Question proposed: "That the Schedule be the Schedule to the Bill."
Mr. Cregan
A question arose as to taxes on repairs. Will the Minister have another look at that matter?
Repairs to rented property are allowed against tax for everybody. If you borrow the money however, the question is whether the interest on that money will be allowed. In case there is any confusion there are two questions there. Leaving this Bill aside, if you rent a property, genuine expenses are allowable against that. Repairs to rented property will be allowed in assessing your Case 5 income. Up until this Bill, interest paid on borrowing for either purchase or repairs was part of those expenses. As and from this Bill, if you owned rental property prior to 23 April the interest on money borrowed for renovating or repairing the house will not be allowable nor will you be allowed to set off the interest on the money borrowed on a house bought after 23 April and on which you got a loan after that date.
In a normal rental computation you are allowed to offset the revenue expenses of property but you are not allowed to do so with capital expenses. To clarify that point, if you did a major job on your rental property and a dispute arose between you and the inspector of taxes as to how much of it was revenue and how much was capital, you would not be allowed to set off against tax what the inspector of taxes identified as capital expenses.
Mr. Cregan
I understand what the Minister is saying but, after 23 April, this will be a short term gain for the Revenue Commissioners. If we are not giving tax incentives through repair allowances to anyone buying a second-hand property who is prepared to repair it, it is a disincentive to buy such properties. There are still large second hand properties available and we do not want to see a deterioration in that market.
The Bacon report is a kick in the backside for some people and rightly so. I do not object to that but let us not create a situation of short term gain for the Revenue Commissioners because that could bring about a deterioration in private second hand housing. I would like the Minister to note that.
No first time buyers could purchase one of those huge properties. I am sure the Minister will accept Senator Cregan's point.
We will keep a critical eye on these matters. I have administered a severe, sharp shock. However, we are conscious of the matters the Senator has raised and we will keep a close, watchful eye on developments in this area.
Question put and agreed to.
Title agreed to.
Bill reported without recommendation, received for final consideration and ordered to be returned to the Dáil.
The Seanad adjourned at 1.40 p.m.sine die.