Ministers urge tax breaks for landlords providing social housing
Ministers for housing and children seek relief for landlords in budget this year
Minister of State Michael D’Arcy was questioned about a report which predicted average rents in Dublin would hit €2,500 a month before the market started to taper. Photograph: Dara Mac Dónaill
Two Government Ministers have urged Minister for Finance Paschal Donohoe to examine the tax treatment of landlords who commit to the delivery of long-term social housing.
The correspondence, sent last week, asks Mr Donohoe to look at how landlords who let out houses for the purposes of sustainable social housing can be assisted by the State.
The two Cabinet Ministers also urged Mr Donohoe to examine what can be done for tenants in properties being sold by their landlords and how they could be allowed remain in situ.
A Government-commissioned report has proposed that, in such situations, a capital gains tax relief of 4 per cent could be accrued every year if a property remained in the rental market.
The review of the tax treatment of landlords conducted by the Department of Finance last year said certain criteria would have to be met to secure the benefit, including a commitment that the property would remain in the rental market for a minimum of five years.
If it was sold or ceased to be let to tenants in less than five years, no relief would apply, the report said.
The Government was criticised yesterday for failing to act on the report, which was received last September, in light of signs of continuing spiralling rents.
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According to the report, Dublin dwellers are already paying almost €400 more a month in rent than they were during the Celtic Tiger boom
Among the proposals included in the review is the acceleration of full mortgage interest deductibility for landlords of residential property.
It currently stands at 85 per cent but the report states a restoration may assist in the retention of rental accommodation and may encourage those seeking to leave the market to stay.
Allowing the property tax to be deducted when landlords are calculating their rental profits or offering reliefs to investors who construct property for the low- to moderate-income rental market are also some of the measures contained in the report.
There are also long-term options including developing a separate method of taxing rental income, including a potential flat tax.
Fianna Fáil spokesman on housing Barry Cowen said the Government had ignored the report’s contents and the problems in the rental market had got significantly worse.
His party would be demanding the measures be examined by the Government ahead of this year’s budget, Mr Cowen added.
A spokesman for the Minister for Housing and a spokeswoman for the Minister for Finance insisted the proposals would form part of budget discussions.
Meanwhile, Minister of State at the Department of Finance Michael D’Arcy was questioned yesterday about a report which predicted average rents in Dublin would hit €2,500 a month before the market started to taper.
According to the report, Dublin dwellers are already paying almost €400 more a month in rent than they were during the Celtic Tiger boom.
Mr D’Arcy acknowledged there was a “rental issue” but claimed there were areas where rents were a “fraction of what is being quoted by the headline figures”.
He cited the “other side of the river” or a “few streets away from the river”, which have lower rental prices.
Every capital city has rental issues at the high end of the market, Mr D’Arcy said.
The Minister claimed this was a “bigger issue for the people who are in higher pay” but the Government had taken issues to address this at Government level in introducing an affordable housing scheme, he added.