Dáil Éireann Debate, Tuesday - 15 December 2009
132 Deputy Olivia Mitchell asked the Minister for Finance if his attention has been drawn to the impact of the second home tax on businesses operating holiday cottages; if his further attention has been drawn to a statement (details supplied) that this tax would be deductible as a normal business expense and this now appears not to be the case; and if he will make a statement on the matter. [46966/09]
View answerThe Tax Acts apply different rules to the computation of taxable income depending on the source of the income. The income receivable from the letting of premises such as self-catering accommodation is regarded as rental income and assessed accordingly. Income from the operation of hotels and bed and breakfast establishments is regarded as trading income and different rules apply to the assessment of such income. While the computation of the tax liability is broadly similar for both types of income, there are some differences. For example, in a rental situation where expenses exceed rents, the loss can only be used to reduce taxable rental income in years subsequent to that in which the loss arises whereas trading losses can be used to reduce other non-trading taxable income in the same year as that in which the loss arises, but can only be used to reduce taxable income from the same trade where it continues to be carried on in subsequent years.
There is no provision whereby a homeowner could offset the €200 local authority charge in respect of non principal private residences. Nor is the €200 charge a deductible expense in respect of rental income where such properties are let.
