Dáil Éireann Debate, Tuesday - 27 June 2017
170. Deputy Barry Cowen asked the Minister for Finance the estimated cost of introducing a scheme to enable landlords in the private rental market to claim full relief on their mortgage interest as an expense against rental income. [30115/17]
Amharc ar fhreagraI am advised by Revenue that, based on personal Income Tax returns filed for the year 2014, the latest year for which complete information is available, and making certain assumptions, it is estimated that the cost of increasing the level at which landlords can claim interest repayments against tax for residential rental properties from 80% (the amount allowable in 2017) to 100% is in the order of €56 million per annum.
As the Deputy will be aware, Finance Act 2016 provided for the phased restoration of full interest deductibility in respect of interest on loans used in the purchase, improvement or repair of rented residential property in computing the amount of rental income chargeable to tax. This is being done over a 5 year period by way of annual increments of 5 percentage points, with the first increase from 75 per cent to 80 per cent having taken effect for interest accruing on or after 1 January 2017.
Further annual 5 percentage point increments in the rate of deductible interest will apply to interest accruing in each of the years 2018 to 2021 inclusive and full deductibility will be restored for interest accruing on or after 1 January 2021.
Restoring full deductibility over a period of 5 years allows for the continued effectiveness in the interim of the incentive introduced in Finance Act 2015 whereby landlords who let their property to social housing tenants for a minimum period of three years can obtain a deduction of 100% of qualifying interest. Further information on this relief is available in section 97 of the Revenue Commissioners – Notes for Guidance – Taxes Consolidation Act 1997 – Finance Act 2016 Edition – Part 4 Principal Provisions Relating to the Schedule D charge, which is available at: http://www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/part04.pdf.
