Terence Flanagan
Ceist:57. Deputy Terence Flanagan asked the Minister for Finance his views on taxes on investment properties (details supplied); and if he will make a statement on the matter. [11127/14]
Amharc ar fhreagraWednesday, 5 March 2014
Ceisteanna (57)
Freagraí scríofa
The Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and the Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced. It is applied at a low rate on a wide base. The revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer.
The USC is an annual tax payable on an individual's total income (including rental income) in a year, subject to a number of exemptions and reliefs. In particular, an individual is not liable to pay USC where his or her total income in the tax year does not exceed €10,036. In addition, individuals aged 70 and over benefit from a lower rate of USC provided their total income does not exceed €60,000.
Where an individual is a chargeable person for income tax purposes, that individual's income is also liable to PRSI. This includes income arising in respect of letting property. The question of benefits arising from PRSI payments are a matter for my colleague the Minister for Social Protection.
I am advised by the Revenue Commissioners that gross rents received by landlords can be reduced by the specified deductions set out in section 97(2) of the Taxes Consolidation Act 1997. This includes interest paid on borrowed money used to purchase, improve or repair the property (which, in the case of residential property, is restricted to 75% of the interest and is subject to compliance with PRTB registration requirements for all tenancies that existed in relation to the property in the relevant year).
The 75% restriction on interest, which applies to residential property, was introduced in the April 2009 supplementary budget as part of a revenue-raising package aimed at stabilising the public finances.
With regard to a property in negative equity, where an investor incurs an actual loss in disposing of an asset, the loss can be set against other capital gains in computing any capital gains tax payable by the individual.
As you may be aware, delivering on a commitment in the Programme for Government, the USC was reviewed by the Department of Finance in the lead up to Budget 2012. The report is available at www.finance.gov.ie .