Dáil Éireann Debate, Tuesday - 30 June 2015
223. Deputy Jerry Buttimer asked the Minister for Finance if he will consider increasing the proportion of mortgage interest on rented residential property that is tax deductible; if he considers that such a measure would help to counteract the increase in rents on residential properties; and if he will make a statement on the matter. [25718/15]
Amharc ar fhreagraThis question relates to the interest restriction applying to residential lettings, whereby the deductibility of interest in computing taxable rental income from residential property (insofar as it would otherwise be allowable) is limited to 75% of such interest. The 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.
I am informed by the Revenue Commissioners that for the year 2013, the latest year for which relevant information is available, and making certain assumptions about the data available to Revenue, it is estimated that the cost from increasing the level at which individuals can claim interest repayments against tax for residential rental properties from 75% to 100% could be in the order of €80 million. This is based on the assumption that tax relief was allowed at the top income tax rate of 41% and the figures provided could be regarded as the maximum Exchequer cost.
Rental income of companies is returned as net of interest on borrowings and the figures for interest are not separately distinguished in Corporation Tax returns. There is, therefore, no basis for an estimate of the cost of changing the tax relief for corporate landlords.
As with all proposals to change reliefs relating to property, there are a number of considerations which must be taken into account to correctly target the measure and ensure this success. 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.
