Thursday, 8 November 2012

Questions (105)

Seán Fleming

Question:

105. Deputy Sean Fleming asked the Minister for Finance the reduction in tax expenditure that would be achieved by phasing out rent relief over three years rather than by 2017 as currently proposed; and if he will make a statement on the matter. [49269/12]

View answer

Written answers (Question to Finance)

Section 473 of the Taxes Consolidation Act, 1997 provides tax relief at the standard rate to individuals who pay for private rented accommodation that is used as their sole or main residence. The level of rent qualifying for rent relief depends on an individual’s marital status and age. In Budget 2011, it was announced that rent relief was being withdrawn on a phased basis. No new claimants were allowed from 7 December 2010 but existing claimants will continue to receive the relief, on a reducing basis, with a complete cessation of the relief from 2018. This is in line with the schedule proposed for the withdrawal of mortgage interest relief. The scheduled withdrawal of rent relief is set out in the following table.

Tax Year

Reduction %

2011

20%

2012

20%

2013

10%

2014

10%

2015

10%

2016

10%

2017

10%

2018

10% to 0%

To phase out the remaining 60% of the relief over the next 3 years i.e. 2013 – 2015, would result in the following yields based on the 2010 costs of the scheme. A standard level of reduction of 20% per annum on the remaining maximum levels of relief is assumed.

Tax Year

Reduction %

Total Yield

€M

Increase in yield over existing reduction

€M

2013

20%

49.7

8.3

2014

20%

66.2

16.5

2015

20% to 0

82.8

24.8