Dáil Éireann Debate, Tuesday - 30 June 2015
243. Deputy Jerry Buttimer asked the Minister for Finance if he will consider making changes to ensure that the local property tax on rented properties is a tax deductible expense; and if he will make a statement on the matter. [25982/15]
Amharc ar fhreagraI am advised by the Revenue Commissioners that at present Local Property Tax (LPT) is not a deductible expense for income tax or corporation tax purposes.
The Thornhill Group, the inter-departmental group, chaired by Dr Don Thornhill, set up to consider the design of a property tax (the "Thornhill Group") recommended that the LPT paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.
The group recognised the considerable pressures on the public finances and the need to bridge the gap between expenditure and revenue, and, for this reason, suggested that consideration be given to phasing in deductibility over a period of years. The group also considered that it was for Government, having regard to the prevailing budgetary situation, to decide on the time span for phasing-in deductibility and what percentage of LPT to allow as a deduction from gross rents for tax purposes.
The Government accepted the recommendation of the Thornhill Group in principle, but has not yet decided the manner or the timing in which this will happen. Any such change would have to be provided for by primary legislation. Allowing LPT as a deductible expense will reduce the tax base. Therefore I must be mindful of the public finances and the many demands on the Exchequer, given the significant budgetary constraints.
The Deputy will be aware that I have asked Dr. Thornhill to conduct a review to consider, and make recommendations on the operation of the LPT, and any impacts on LPT liabilities due to property price developments.
In particular the Review will have regard to:
- Recent residential property price developments,
- The overall yield from LPT and its contribution to total tax revenue on an ongoing basis, and
- The desirability of achieving relative stability, both over the short and longer terms, in LPT payments of liable persons.
It is intended that the Review be presented to me no later than summer 2015, with a view to consideration of any recommendations therein in the context of the Budget.
As the Deputy will appreciate, it would not be appropriate for me to comment on matters that may or may not feature in the Budget.
