Scrapping tax relief a 'disaster'
ABOLISHING tax relief on rental properties won't reap any benefits to the Exchequer for up to two years and would be a "disaster" for the property market, it was claimed last night, writes Aine Kerr.
The Labour Party is proposing the scrapping of interest relief on rental properties in an effort to save €800m.
But because landlords are self-assessment taxpayers, abolition of the tax relief would not produce immediate savings, the Department of Finance confirmed.
It could take up to two years for the full benefit to materialise, thereby not producing the urgent savings that are required over the next nine months.
However, Labour's Joan Burton last night said she was "perfectly confident" that savings could be made this year by making an insertion in the Finance Act obliging landlords to make a preliminary tax return when doing their assessments in October.
Interest
"In a lot of cases, they wouldn't have paid any tax on the rental incomes because of the availability of the interest and other relief but if that situation were to change, they would be advised by their tax advisers to make an estimate of what their tax liability is and they would have to pay 90pc of that estimate," she said.
The Irish Property Owners' Association [IPOA] claimed withdrawing mortgage interest relief would reduce the amount of investors in rental property and drive up rents.
"People are being encouraged to try to provide for their old age, and buying property and letting is one of the ways that has been encouraged," said Stephen Faughnan of IPOA.
- Aine Kerr
