To ask the Minister for Finance the estimated first and full year cost of a capital gains tax relief of 4% per annum which would accrue on an annual basis for a property purchased with a tenant in situ and is retained as a rental property for a minimum of five years.
To cost the measures requested by the Deputy, certain information would need to be available, including the number of eligible landlords, estimates for the relevant element of the capital costs and the numbers of properties purchased with a tenant in situ. In the absence of this information it is not possible to cost the proposal.
To ask the Minister for Finance the estimated first and full year cost of a tax deduction against rental income for an element of the capital cost of a property in the initial years of ownership of a residential rental unit with a corresponding reduction in the base cost of the property on a future disposal for capital gains tax purposes based on 4% of the capital cost per annum for the first five years.
The Report of the Working Group on the Tax and Fiscal Treatment of Rental Accommodation Providers (2017) identified the measure suggested by the deputy as a possible medium-term option. The report does not cost the measure but notes that three factors relevant for the costing would be:
the reduction in current income tax revenues;
in the longer term, the claw-back of the deduction as CGT rather than income tax, USC and PRSI; and
the potential for loss to the Exchequer if the property is not subject to CGT in future.
I am advised by Revenue that to cost the measure, certain further information would need to be available, including the number of eligible landlords and estimates for the relevant element of the capital costs. In the absence of this information it is not possible for Revenue to identify a cost.
To ask the Minister for Finance the estimated first and full year cost of a deduction for pre-letting expenses incurred by a landlord in bringing a property which has been vacant for a minimum period of one year to the rental market.
In Budget 2018 I introduced a new deduction for pre-letting expenses of a revenue nature incurred on a property that has been vacant for a period of 12 months or more. I introduced this measure in order to encourage owners of vacant residential property to bring such properties into the rental market.
A cap on allowable expenses of €5,000 per property applies, and the relief is subject to clawback if the property is withdrawn from the rental market within 4 years. The relief is available for qualifying expenses incurred up to the end of 2021. At the time of Budget 2018, this measure was projected to cost €1.5 million in 2018 and €3 million in a full year.
I have been informed by Revenue, that as tax returns for 2018 are not due to be filed until after the year’s end, it is not possible at present to comment on the current uptake of the scheme or update the projected cost estimates.
To ask the Minister for Finance the estimated first and full year cost of allowing landlords to offset current year rental losses arising under current Case V taxation rules against other taxable income in the same year.
Income is classified under a number of categories for taxation purposes and there are distinct rules for each category. As the Deputy notes, rental income from Irish property is taxed under Case V of Schedule D. The rules for Case V provide that landlords can carry forward rental losses for offset against future rental profits, but cannot offset rental losses against other net taxable income in the current year, other than rental profits from other Irish properties. Revenue have informed me that the manner in which losses are recorded on tax returns reflects the current structure of tax legislation, that is, Irish rental losses can only be offset against profits from Irish rental properties. As such, given the data which is available, it is not possible for Revenue to estimate the cost of allowing rental losses to be offset against non-rental profits.
To ask the Minister for Finance the estimated first and full year cost of increasing the home renovation incentive relief rate by 1.5% intervals up to 20%; and if he will make a statement on the matter.
The Home Renovation Incentive (HRI) is a scheme that allows home owners, landlords and local authority tenants to claim tax relief on qualifying works. The works must be completed by a tax-compliant contractor and be subject to 13.5% VAT. The HRI relief is paid in the form of a tax credit at 13.5% of qualifying expenditure, which can be set against Income Tax evenly over two years, provided the claimant has paid enough tax in each of the two years to claim it back. Where the full use of the credit cannot be made in those two years, the credit will be carried forward to later years. This rate of 13.5% is in line with the VAT rate so that it effectively reduces the rate of VAT to zero on qualifying works. HRI can be applied for up to 4 years after the qualifying works have been completed.
The additional costs of increases to the relief in the manner outlined by the Deputy are set out in the table below:
(€ Million) (€ Million)
Rate of Relief First Year Full Year
13.5% 0 0
15.0% 1.3 2.5
16.5% 2.5 5.1
18.0% 3.8 7.6
19.5% 5.1 10.1
20.0% 5.5 11.0
The first year cost of these increases is approximately half of the full year cost due to the requirement to split this credit across a period of at least two years. These costs are based on the maximum amount of HRI credits available to be claimed in 2016.
The Deputy may wish to note that quarterly and annual HRI statistical reports can be found on Revenue’s website: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx.
To ask the Minister for Finance the estimated first and full year cost of increasing the rent a room tax relief scheme threshold by €1,000 intervals to €20,000.
As the deputy may be aware, the numbers of those availing of the rent a room relief and the cost to the Exchequer can be found on the cost of tax expenditures report. The report can be located at the following link:
I am advised by Revenue that it is not possible to estimate the costs for the changes to the rent a room scheme as suggested by the deputy. In order to do so, Revenue would require knowledge of the number of potential claimants with rental income in excess of this amount. However, tax returns are only filed by those claiming under the current threshold and therefore no information is available to Revenue on the potential number of new claimants.
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