Dáil Éireann Debate, Tuesday - 8 April 2014
126. Deputy Michael McGrath asked the Minister for Finance the tax expenditure associated with interest relief on buy-to-let properties in each year from 2008 to 2013, inclusive; and if he will make a statement on the matter. [16417/14]
View answerI am informed by the Revenue Commissioners that landlords may deduct interest on money borrowed to purchase, improve or repair residential property from the gross rent when computing their rental profits for tax purposes on that property. Interest can only be deducted during the period in which the property is let.
Information on interest relief for rental property is based on all claims for such relief in Form 11 personal income tax returns filed by non-PAYE taxpayers. 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 at present. However, a PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete a Form 11 return. Interest relief associated with corporate landlords is not captured on the corporate tax CT1 return and is therefore not available.
I am also informed by the Commissioners that it is not possible from Revenue data to distinguish relief claimed by "buy to let" landlords. By this, I assume the Deputy means landlords that purchase property for rental purposes, often with a mortgage specifically granted for this purpose. Based on personal income tax Form 11 returns filed by non-PAYE taxpayers for 2008 to 2012, the latest year available, the estimated amount of tax foregone by allowing a deduction for interest on borrowings to be offset against rental income is as follows:
|
Year |
Cost €m (for both residential and commercial properties) |
|
2008 |
1,210 |
|
2009 |
763 |
|
2010 |
672 |
|
2011 |
691 |
|
2012 (provisional) |
575 |
The estimates in the table are based on assuming that tax relief was allowed at the top income tax rate of 41% and the figure provided could, therefore, be regarded as the maximum Exchequer cost in respect of those taxpayers. I am advised by the Revenue Commissioners that they are not in a position to provide data for 2013, as the tax returns for that year are not yet due. The figures for 2012 are subject to adjustment in the event of late returns being filed or where returns already filed are subsequently amended.
