Olwyn Enright
Question:113 Ms Enright asked the Minister for Finance if he is satisfied with the equity of the tax treatment of the housing sector. [29906/04]
View answerTuesday, 23 November 2004
Questions (70)
Written answers
A range of tax incentives exist in the housing market in the case of first-time and other owner occupiers, investors and tenants. For owner-occupiers, mortgage interest relief at the standard rate is granted in respect of interest paid up to a ceiling on loans used for the purchase or improvement of a person's sole or main residence. Preferential arrangements exist for first-time buyers over other owner occupiers. The existing higher ceilings for first-time buyers on allowable interest were increased in budget 2003. The period for which these increased ceilings will apply was extended from five years to seven years.
All owner-occupiers, including first-time buyers, are generally exempt from stamp duty on new houses where the property is 125 square metres or less. In addition, there is more favourable stamp duty treatment for first-time buyers of second hand houses up to €381,000 as compared to other purchasers. Owner-occupiers also are not subject to capital gains tax on the gain from the disposal of their main residence.
In relation to investors, in budget 2002, against a background of increasing rents and a shortage of rental stock, mortgage interest relief was reintroduced in respect of borrowings for use in the rented residential sector. For tenants, tax relief at the standard rate is available to individuals in respect of rent paid on their accommodation up to a certain ceiling.
The years 2002 and 2003 were the eight and ninth successive years of record housing output with 57,695 and 68,819 completions, respectively. This positive trend in supply has continued into 2004, with statistics for the six months to June showing that overall house completions at 35,957 were up 21.4% on the same period last year.
The housing market is a complex and dynamic one and demands continuous monitoring and adjustment to address changing circumstances. In such examinations tax equity is always a consideration. As the Deputy will appreciate, it is not the practice to comment on the possibility or otherwise of tax policy changes in the lead up to the annual budget.