Dáil Éireann Debate, Tuesday - 11 July 2023
190. Deputy Colm Burke asked the Minister for Finance if his Department would consider reducing tax charged from the marginal to the standard rate and removing PRSI liability from rental income as an interim measure; and if he will make a statement on the matter. [33559/23]
View answer194. Deputy Colm Burke asked the Minister for Finance if he will give due consideration to extending "the rent a room relief scheme" to landlords whose total rental income does not exceed the current threshold of €14,000 per annum; and if he will make a statement on the matter. [33640/23]
View answerI propose to take Questions Nos. 190 and 194 together.
The Rent a Room scheme was introduced in Finance Act 2001 as an incentive to encourage individuals to let rooms in their principal private residence as residential accommodation in order to bring about an increase in the availability of rental accommodation. In accordance with section 216A of the Taxes Consolidation Act 1997, an individual who lets a room or rooms in her or his sole or main residence as residential accommodation may be exempt from income tax, PRSI and USC in respect of income from the letting where the aggregate of the gross rents and any sums for meals or other services supplied with the letting does not exceed the threshold for the year in question, which is €14,000 for 2023. Although the relief applies automatically, the amount of exempt rental income must be included in the individual’s tax return for the year in question. The upper income threshold of €14,000 would allow an individual to receive income of up to €1,166.66 per month over a 12 month period under the scheme, without it giving rise to a tax liability.
It is important to note that a wide array of tax reliefs and exemptions are already available for landlords and the property sector. The combined cost of these, in tax receipts forgone, is significant. Tax reliefs, no matter how worthwhile in themselves, may serve to narrow the tax base and can make general reform of the tax system that much more difficult. While the use of tax measures to retain landlords in the rental market, or increase supply may be well-intentioned, Ireland’s history shows the issue of property-based tax expenditures should be approached with caution, even in the case of an interim measure.
With that said, my Department continues to monitor all aspects of the property market, and I will continue to work with my colleagues in Government to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of housing in both the public and private sectors.
Finally, and as the Deputy will appreciate, decisions regarding tax incentives and reliefs are normally made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines.
