WITH THE BUDGET just days away, Housing Minister Darragh O’Brien has confirmed he is pushing for a cut in tax for small landlords as “good landlords” are leaving the market.
Speaking to The Journal today the Minister said negotiations are still ongoing and he expects nothing to be decided until Monday night but that his preference is to see a reduction in small landlords’ income tax.
He said the biggest reason for small landlords selling their properties is because the tax on their rental income is too high.
“From talking to the sector, the biggest issue that has come forward from them in relation to cost has been the annualised cost – i.e. their tax. So what can be done in that space will help and that’s what we’re focusing on.
“The issue has been for a lot of people, or individual or accidental landlords is that the proportion of the rental income they receive that’s taxable, is too high. And we need to give them a break there in that space,” O’Brien told The Journal.
Currently rental income is taxed at 40%, matching the higher rate of income tax paid by PAYE workers.
When asked what he would like to see this figure reduced to, the Minister said he could not give a figure because it was still being worked through and discussions are ongoing with the Department of Finance.
It was put to the Minister that a reduction in tax on rental income could see significant pushback from opposition parties, with Labour Senator Marie Sherlock recently saying that taxing rental income on a lower rate than PAYE work would be inequitable.
In response the Minister said:
“I think it would be fair to see what the proposal is and what comes out of the budget and what the conditionality related to it is.
“The purpose of why we’re doing this is to help to stem the flow of rental properties out of the market. We’re buying a lot of them, but there’s other landlords leaving ,good landlords who have been there a long time. We want to try to help them to stay in,” O’Brien said.
It is understood that this reduction in tax paid may also be achieved through tax credits or an expansion of what landlords are able to write off for tax purposes.
Elsewhere, it is understood that the Housing Minister is also pushing for the renters’ tax credit to increase to €780 – to match the average rent paid in the country.
However, the Minister would not confirm today whether this desired increase would be achieved or not as part of budget negotiations.
The Rent Tax Credit was introduced in Budget 2023 and is worth €500 per year per claim. Renters who are paying tax on their earnings can claim the money back from Revenue as long as their landlord is registered with the Residential Tenancies Board (RTB).
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