Plan to give landlords tax deal in return for rent freeze
Published 01/09/2015 | 02:30
Thousands of tenants would benefit from a two-year freeze in rents under a plan put forward by campaigners.
The Fr Peter McVerry Trust and Ibec's Property Industry Ireland have joined forces to endorse a plan to allow landlords treat property tax payments as an expense - in return for giving tenants a rent break.
The plan was put together by financial expert Karl Deeter.
The initiative to ease the rental crisis comes as the Government continues to consider a scheme drawn up by Environment Minister Alan Kelly to tackle spiralling rents.
But Mr Deeter and Fr McVerry have instead proposed a voluntary scheme to allow landlords offset all their expenses, as others businesses can do, in return for not raising rents
Landlords would "opt in" to the scheme. After two years, if the tenant produces a letter confirming that the rent did not increase, then the landlord would get the extra tax benefits.
The Private Rental Tenancies Board and Revenue would liaise on the scheme.
Mr Deeter, of Irish Mortgage Brokers, said: "We think this is a good short-term measure that could benefit both sides."
Fr McVerry said the vast majority of those becoming homeless are coming from the private rented sector.
Landlords that sign up for a two-year rent freeze would treat property tax as an expense, and get full mortgage relief when filing a tax return.
Finance Minister Michael Noonan had promised to allow landlords to offset property tax against income, but this has not been put in place.
Landlords can only claim 75pc of the interest they pay on a mortgage against their tax bill following a budgetary change during the economic downturn.
Property owners argue that this means that 25pc of the interest paid on money borrowed is not allowable when it comes to tax returns. In contrast, all interest is allowed on commercial property.
The plan for a rent freeze in return for property tax to be treated as an expense, and full mortgage interest tax relief, was examined by director of taxation at Chartered Accountants Ireland Brian Keegan who said it was workable.