Dáil Éireann Debate, Tuesday - 30 June 2015
221. Deputy Jerry Buttimer asked the Minister for Finance if he will redress the imbalance in the different tax treatment of commercial and residential property investments; and if he will make a statement on the matter. [25716/15]
Amharc ar fhreagraI assume the Deputy is referring to the different deductions available against rental income for commercial and residential property. In that regard, I am informed by the Revenue Commissioners that rental income for tax purposes is the gross rental income less allowable expenses incurred in earning that rent, as specified in section 97(2) of the Taxes Consolidation Act 1997. The main deductible expenses are:
- any rent payable by the landlord in the case of a sub-lease;
- the cost to the landlord of any goods provided or services rendered to a tenant;
- the cost of maintenance, repairs, insurance and management of the property;
- the interest 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 Private Residential Tenancies Board registration requirements for all tenancies that existed in relation to the property in the relevant year); and
- the payment of local authority rates.
In addition, wear and tear capital allowances are available in respect of the capital 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.
Section 5 of Finance Act 2009 imposed a cap of 75% on the amount of interest on loans used to purchase, improve or repair a rented residential premises that can be deducted in computing the amount of a person's taxable rental income. This restriction was introduced in the April 2009 supplementary budget in respect of all residential lettings as part of an urgent revenue-raising package aimed at stabilising the public finances. The restriction does not apply to loans taken out to finance non-residential property and the full amount of interest can continue to be deducted in such cases.
Local Property Tax
A deduction is not allowed in respect of LPT as it is not one of the specified deductions provided for in section 97(2) of the TCA.
Local Property Tax is an annual self-assessed tax on residential properties in the State and is administered by the Revenue Commissioners in accordance with the Finance (Local Property Tax) Act 2012 (as amended).
Stamp Duty
The rate of stamp duty applicable to Conveyances/Transfers of Non-Residential Property is 2%. The rates of stamp duty applicable to Conveyances/Transfers of Residential Property are: 1% for the first €1,000,000 and 2% on the excess over €1,000,000.
Commercial Rates
I am advised by the Minister for the Environment, Community and Local Government that properties used for commercial purposes are subject to rates levied by local authorities which are based on values entered on the valuation lists by the independent Commissioner of Valuation under the Valuation Acts 2001 (as amended). That Act determines the categories of properties that are liable for rates purposes.
As the Deputy will know, all tax reliefs and incentives are subject to regular review as part of the annual Budget and Finance Bill planning process. Any decisions taken by the Government in this regard are usually announced on Budget Day. If the Deputy would care to specify in more detail where he considers an imbalance exists then I will be pleased to ask my officials to investigate.
