Tax breaks for "accidental landlords" are in the pipeline in a bid to keep properties in the rental market and boost supply.
The Department of Finance has set out a range of possible tax reliefs which might be applied to encourage landlords to remain in, or to enter, the rental market.
More towns are also expected to be designated as rent pressure zones in the coming weeks amid growing concern about the rising cost of renting a home.
Cobh, Maynooth and Greystones all missed out in January, but could feature this time.
Among the options to be considered to alleviate the rent crisis is a reduced tax rate on rental income for individuals, or tax reliefs to be targeted at "accidental landlords".
The public consultation document on the tax treatment of residential landlords also raises the prospect of the property tax liability being transferred from landlords to tenants.
It follows concerns that residential landlords were not treated in a similar fashion to commercial landlords, and that this could discourage some from entering or remaining in the market.
The consultation document said that landlords are an "essential feature of a fully functioning property market", but said that almost 70pc of landlords own just one property, and 91pc have three or less.
Large, professional landlords such as real estate investment trusts, corporate vehicles and investment funds, account for just over 2pc of tenancies.
While income earned by individuals from the letting of property is liable for income tax under self-assessment, rental income earned by companies is subject to a lower rate of corporation tax.
Also mooted is additional tax relief for expenses including restoration of 100pc relief on mortgage interest, deduction for the time allocated to managing a property, and deduction of the Local Property Tax.
VAT relief for construction of rental accommodation and the introduction of "penalty taxes" for vacant property or development land could also be introduced.
The review was promised in the Rebuilding Ireland strategy for the rental sector, published last December.
A working group has been established made up of officials from the Department of Housing and the Department of Finance, Residential Tenancies Board (RTB) and Revenue Commissioners, and the closing date for submissions is April 7 next.
The Government will examine if new tax reliefs or other measures are required to incentivise landlords to remain in, or enter, the rental market.
No decisions will be made until after the consultation is included, and EU state aid rules will have to be taken into account if any new measures are proposed.
The working group will report back in the summer with a view to proposals being announced in October's Budget.
Meanwhile, Housing Minister Simon Coveney is expected to ask the RTB to submit a detailed report on introducing new rent controls in Cobh, Maynooth and Greystones. These are all towns which were not included in the Government's rent cap scheme in January, despite rising costs.
The identity of the towns to be subject to rent caps is not yet known, and will only be decided after the RTB publishes its rent index for the last quarter of 2016. This will record the average cost of renting a home across more than 400 locations.
For an area to be designated as a rent pressure zone, the annual rate of rent inflation must have been 7pc or more in four of the last six quarters, and the rent must be above the national average - which is currently €973 a month.
If the area applies, rents cannot rise by more than 4pc a year for a maximum of three years.
Irish Independent
No comments:
Post a Comment