TAX BREAKS FOR smaller landlords are “not off the table”, according to Taoiseach Leo Varadkar.
Government sources have indicated that Budget 2024 is far away and so tax changes may have to be made to prevent a mass exodus of small landlords from the rental market.
At a summit with housing stakeholders held yesterday in Government Buildings, a number of proposals are understood to have been put forward to benefit landlords, such as lowering the 52% tax rate landlords must pay on rental income, as well as deductions and reliefs on expenses, and changes to capital gains tax.
“Nothing is off the table at this stage. Any proposals that come forward will be considered, nothing’s off the table without due consideration,” said Varadkar yesterday.
“Some policies around tax were put forward today, both in terms of incentivising builders to build but also incentivising small landlords to stay in the market, because the exodus of small landlords from the market is contributing to a rise in homelessness.”
The Irish Property Owners Association has previously said landlords are leaving the market due to taxation on rental income being over 50%, complicated legislation and rent controls.
The group said landlords are not immune to the cost of living crisis and many of them depend on their rental income to pay their mortgages, while trying to make provisions for their families and pensions in the years to come.
The recent mortgage interest rate hike is understood to be a concern within government in terms of small landlords perhaps being in a position where they are losing money when balancing rent paid, mortgage costs and the 50% tax that must be paid on rental income.
Government sources have said that a “judgement call” will need to be made by coalition leaders at the end of March on whether the eviction ban, which is due to end in April, should be extended and alongside that, if tax incentives for landlords should be brought in.
It is understood that such issues have yet to be discussed by party leaders. Any discussion around tax changes mid-year will need to involve the Department of Finance.
Varadkar would not be drawn on the details of what might be under consideration, saying that he needed to be careful around what he said on the matter because no decisions had been made in relation to tax.
He said the anticipation that there may be changes could cause people to change their behaviour.
Housing Minister
In an interview before Christmas, Housing Minister Darragh O’Brien said the tax treatment of small landlords had to be revisited.
Speaking to The Journal after being re-appointed to his role, O’Brien said that while the budget did make some changes for landlords in terms of expenses and energy retrofits, more needs to be done to keep them in the market.
Ahead of the Budget in September, it was flagged that if a rent credit was to be introduced for tenants, then landlords would also in turn have to see a benefit. It was reported widely in the lead up to the 27 September Budget that tax breaks for landlords were under consideration.
However, after the Budget announcement - which included a tax credit worth up to €500 per calendar year for renters - there was criticism among landlord groups that enough wasn’t being done to keep smaller operators in the sector.
“I do think we need to do more for individual landlords who are staying in the market, I’ll be frank, we’ve got to go back and have a look at the tax treatment.
“I think it’s something that government will discuss further,” said the housing minister last month.
Varadkar said yesterday that there wasn’t unanimity on all the ideas at the housing summit, with some people suggesting the eviction ban should be extended and others pointing out that there could be negative consequences to that.
When it comes to renters, the housing minister has said separately that he would like to see the rent tax credit, introduced in the last budget, extended.
A €1,000 rent tax credit for 2022 and 2023 - €500 per year – for people who pay for private rented accommodation was announced last September as part of the Budget.
Any decision to extend the credit would be a budgetary decision, said O’Brien.
Tanaiste Micheál Martin said last year that the rent credit was a platform that could be built upon.
The housing minister previously told The Journal at the Fianna Fáil ard fheis that he agreed with Martin that it could be increased.
“€1,000 per renter, €500 for 2022 and €500 for 2023: that will make a big difference for a lot of people and I do agree completely with the Taoiseach. That’s our starting position.
“So next year because we’ve made a permanent change, not just a cost-of-living change., we will be looking to see how we can increase that rate into the future. Renters need help, we as a party understand that, and this is a significant step towards it,” O’Brien said.
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