Landlords may get property tax rebate

Tax breaks allowing landlords to offset the cost of paying local property taxes against what they owe Revenue are being considered as part of measures for next week’s budget.

Landlords may get property tax rebate

The news comes as Minister for Children Katherine Zappone concluded her budget talks with Public Expenditure Minister Paschal Donohoe last night.

She has pressed for subsidised childcare to be prioritised for lower-income families, possibly up to a household income threshold of €47,000. She has maintained that extending direct State-funded childcare to higher income families would very much depend on what the Government allocate for her department in the budget.

The landlord tax break measure, which the Government is agreeable to, would allow property taxes become a deductible expense in calculating a landlord’s taxable rental income.

Landlords want the move, recommended in the Thornhill report on property tax, implemented or suggest that, alternatively, the cost of the charge should be paid by tenants themselves.

Department of Finance sources say the tax break is acceptable in principle but that the measure may not be done in one go.

The source confirmed the measure is in the mix, on the basis that the Programme for Government promises “enhanced tax relief for landlords who accept rent supplement and HAP tenants”.

Finance Minister Michael Noonan previously told the last Dáil that the Government “had agreed in principle” with “the recommendation of the Thornhill Report that the local property tax should be a deductible expense in calculating a landlord’s taxable rental income”.

Mr Noonan noted the report recommended “phasing in deductibility over a period of years.”

Department of Finance sources said last night that a lot of good measures in principle would be in the budget but that some would be “funded on a phased basis”.

Landlords have asked the Government to introduce the tax break in this budget, pointing out that it was shelved for the last one. The alternative is for tenants to pay property taxes, the Irish Property Owners Association (IPOA) said in a submission.

“The taxes that are, and have been, introduced to fund local services should be levied on the user,” the IPOA budget submission says. “The ‘user pays’ principle is the fairest system, with waivers available in certain circumstances. If users are not levied directly, these are legitimate rental expenses and should be allowable as such.”

Some 40,000 landlords have left the sector since 2011, say representatives. While 65% of them have one property, almost two thirds have difficulties paying their loans and expenses, says the IPOA.

The Government has frozen the amount home-owners in general pay in property tax until 2019.

Mr Noonan briefed the Cabinet last week about budget options, including extending tax relief for landlords by allowing them offset their rental liability against mortgage interest costs.

Meanwhile, Mr Donohoe said he is “in the middle of very difficult discussions”, which are set to continue over the weekend.

“I have much progress that I have to make in the coming days,” said Mr Donohoe. “I expect to be working through the weekend on this matter.”

Last night, there were reports that the first-time buyers incentive could be as high as €20,000. However, this was not confirmed either by the Government or the opposition.

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