Wednesday, 2 October 2013

Questions (124)

Michael McGrath

Question:

124. Deputy Michael McGrath asked the Minister for Finance the yield that would be achieved from abolishing rent relief from 1 January 2014; and if he will make a statement on the matter. [41363/13]

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 In Budget 2011, it was announced that rent relief was being withdrawn on a phased basis.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%

It is assumed that the deputy has in mind the abolition of the remaining 50% of the relief with immediate effect from 1 January 2014. On that basis a residual saving to the Exchequer of €42 million would arise in respect of 2014, based on the 2011 costs of the scheme, the latest year for which historical data are available. That amount would represent an estimated increase of €34m over the saving expected for 2014 under the original plan for phased reduction.