Dáil Éireann Debate, Thursday - 14 November 2013
47. Deputy Róisín Shortall asked the Minister for Finance further to Parliamentary Question No. 99 of 20 December 2012, if he will provide the corresponding figures in respect of 2011 and, if available, 2012. [48724/13]
View answerLandlords cannot claim mortgage interest relief which is only available for owner occupiers in respect of their principal private residence. I am informed by the Revenue Commissioners that landlords may deduct 75% of the interest on money borrowed to purchase, improve or repair commercial property from the gross rent when computing their rental profits for tax purposes on that property. Interest incurred before the first occupation of the property by a tenant for the purposes of a trade or undertaking, or between lettings, is not deductible. Based on personal income tax returns filed by non-PAYE taxpayers for the tax year 2011, the latest year available, the amount of tax foregone by allowing a deduction for interest on borrowings to be offset against domestic rental income assessable under Case V, Schedule D for both residential and commercial property was in the region of €690 million and the number of claims by individual taxpayers was 124,021. It is not possible to break down these costs between commercial and residential property.
In relation to interest claimed as a deduction against foreign rental income, based on personal income tax returns filed by non-PAYE taxpayers for the tax year 2011, the latest year available, the estimated tax cost is estimated at €66 million in respect of and the number of 14,501 claims by individual taxpayers.
New claims cannot be separately identified from ongoing claims in the data source and accordingly the relevant details of these cannot be shown separately.
These estimates are based on assuming that tax relief was allowed at the top income tax rate of 41% and the figures provided could, therefore, be regarded as the maximum Exchequer costs in respect of those taxpayers. I am advised by the Revenue Commissioners that they are not in a position to provide data for 2012 as the tax returns for that year are not yet fully filed or processed. The figures shown are subject to adjustment in the event of late returns being filed or where returns already filed are subsequently amended.
It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return form 12 is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 chargeable to tax is required to complete an income tax return form 11. This return is the source of the figures provided in this reply. As rental income of companies is returned as net of interest on borrowings, the figures for interest are not separately distinguishable and there is, therefore, no basis on which an estimate of the cost in respect of companies can be given.
I am also advised by the Commissioners that the legislative provision which allows a deduction for interest on borrowings used for the purchase, improvement or repair of rental property outside the State (section 71(4) of the Taxes Consolidation Act 1997 (TCA 1997)) was introduced by Finance Act 1974, and provides a similar deduction in respect of interest for the owners of such property as applies in respect of owners of rental property in the State (section 97(2)(e) TCA 1997).
Any change or discontinuance of the existing interest deduction for properties outside the State could fall foul of EU law on grounds of discrimination in that different tax treatments would apply here for some residents of the State as compared with other residents of the State. In addition, it would likely fall foul of EU law in terms of restricting the free movement of capital within the Union.
