Tuesday, 27 May 2014

Questions (34)

Michael McGrath

Question:

34. Deputy Michael McGrath asked the Minister for Finance if he will consider easing the tax burden on families who are forced to move out of their principal private residence and rent another property due to changed family circumstances; and if he will make a statement on the matter. [23032/14]

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Written answers (Question to Finance)

I assume the Deputy is referring to the loss of mortgage interest relief in this particular circumstance. That relief is available in respect of interest paid on qualifying loans taken out on or after 1 January 2004 and on or before 31 December 2012 and such relief applies up to and including the tax year 2017. As the Deputy will be aware, mortgage interest relief is available at varying rates and subject to certain ceilings, in respect of interest paid by an individual on a loan used by that individual for the purchase, repair, development or improvement of his/her sole or main residence.

I should point out that although I am sympathetic to those that move out of their principal private residence and rent another property due to changed family circumstances, given the current budgetary constraints I have no plans to widen the scope of the relief to cater for people who are renting out their property, as the measure would become less targeted and very costly. Nevertheless, an individual who rents out residential property may be allowed a deduction, subject to certain conditions, in computing the taxable rents from that letting of 75% of the interest on monies borrowed to purchase, improve or repair that property. 

This Government is very conscious of the significant concerns and difficulties faced by home owners, not least in relation to their mortgages.  In addition, the Government is committed to helping address the particular problems faced by those that bought homes at the height of the property boom between 2004 and 2008. In this regard, in Budget 2012, I announced my intention to fulfil the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period. A mortgage holder will qualify for the increased rate if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in that period.

While it is accepted that the provisions do not serve to address the concerns or particular issues of all who may have bought then, it would be impossible to design a system that meets the needs of every individual. As you will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones, but I must be mindful of the public finances and the many demands on the Exchequer. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.