Budget 2016 seen as ‘very unfair’ on landlords
Those renting out properties are unlikely to see their annual tax bill fall significantly
Budget 2016 has been criticised as ‘very unfair’ on landlords. File photograph: iStockphoto
There was little joy in this year’s budget for landlords, with those renting out properties unlikely to see their annual tax bill fall significantly.
Brendan Allen, of chartered tax advisers Allen Morrissey & Co, said he was “very disappointed” with the outcome for landlords.
“There is nothing that I can see that will have any effect on landlords,” he said, noting that no adjustment was made to the restriction on mortgage interest that can be claimed, which remains capped at 75 per cent. “It’s very unfair,” he said.
Brian Keegan, director of taxation at Chartered Accountants Ireland, argued that tax reliefs could have a part to play in easing the housing crisis in the rental sector.
“This is because tax reliefs can take immediate effect,” he said.
Mr Allen welcomed Minister for Finance Michael Noonan’s intention to postpone the revaluation date for the local property tax (LPT) from 2016 to 2019, saying that it will give landlords clarity on what they owe.
However, he criticised the fact that property tax is not yet allowed as a deductible expense when calculating tax liability on rental income.
“One of the reasons why rents are going up is because effective tax rates for landlords are so high that it doesn’t make sense to be a landlord,” he said.
Universal Social Charge
The reduction in the Universal Social Charge, which includes a cut of 0.5 per cent to the 1.5 per cent and 3.5 per cent rates, will be welcomed by many landlords, but may not help those who are already earning up to €70,000 a year, as the top rate of 8 per cent is to remain.
With the November 12th deadline for online tax returns rapidly approaching, Mr Allen said that many landlords still struggle to meet their tax bill.
“This year we’re getting more queries as to why tax bills are so high,” he said.
For ad hoc landlords, earning occasional income through Airbnb or similar websites, the budget offered no relief, despite lobbying efforts to allow hosts avail of the €12,000 tax free rent-a-room scheme.