Dáil Éireann Debate, Thursday - 1 October 2015
80. Deputy Michael McGrath asked the Minister for Finance to outline the cost of providing 100% mortgage interest relief for landlords who agree to sign up to long-term family tenure leases of at least four years duration; and if he will make a statement on the matter. [33855/15]
View answer81. Deputy Michael McGrath asked the Minister for Finance to outline the cost of providing 100% mortgage interest relief for landlords who agree not to increase rent for a period of three years; and if he will make a statement on the matter. [33857/15]
View answer82. Deputy Michael McGrath asked the Minister for Finance to outline the cost of providing 100% mortgage interest relief for landlords who agree to provide accommodation to tenants under the rental accommodation scheme and the housing assistance payment scheme; and if he will make a statement on the matter. [33858/15]
View answerI propose to take Questions Nos. 80 to 82, inclusive, together.
It is not possible to cost the reliefs proposed in the Deputy's questions. The Revenue Commissioners do not require rental income data to be returned in a manner which would enable commercial and private rental accommodation income to be separately identified. Similarly, income from the categories of tenant in the Deputy's proposals and the current level of mortgage interest deduction specific to such lettings is not separately identified.
In this context, it should be noted that an increase in interest deductibility would only be of benefit to those landlords that have borrowings outstanding in respect of the purchase or improvement of the relevant property. This limits the potential of any measure to incentivise landlords to commit to rent certainty. In addition, rent certainty would not of itself solve the supply-side issues that are driving rent increases. I note that the ESRI in their Quarterly Economic Commentary, published yesterday, urged that in light of difficult past experience, extreme caution should be taken when any use of the tax system as a means of stimulating activity in the residential property market is being considered.
Significant administrative issues would also need to be addressed in the implementation of such a measure. It should also be noted that any increase in the deduction allowed for interest could not be confined to areas experiencing specific accommodation shortfalls, such as the major urban centres, and this would significantly increase the deadweight cost of the measure. Furthermore it is likely that the increased deductibility would have to be applied in respect of taxable rental income sourced throughout the EU/EEA, where similar conditions are met.
With regard to the calculation of rental profits under current legislation, I would point out that there are also a number of other allowances and deductions available to reduce the tax on rental income paid. These include, for example, the cost to the landlord of any goods provided or services rendered to a tenant and the cost of maintenance, repairs, insurance and management of the property.
In addition, wear and tear allowances are available in respect of expenditure incurred on fixtures and fittings provided by a landlord for the purposes of furnishing rented residential accommodation. These allowances are granted at the rate of 12.5% per annum of the actual cost of the fixtures and fittings over a period of 8 years.
The Deputy may wish to note that the 2013 Report of the Comptroller and Auditor General contained, in Chapter 16, a detailed review of the taxation of rental income and expenses deductible therefrom. This report is available on the website of the Comptroller and Auditor General: http://audgen.gov.ie/documents/annualreports/2013/report/en/Chap16.pdf.
