FINANCE MINISTER MICHAEL McGrath has said that any changes to the tax treatment of landlords in Budget 2024 must be “approached with caution”.
Both Taoiseach Leo Varadkar and Housing Minister Darragh O’Brien have signalled their willingness to examine changes to the tax treatment of landlords in recent months.
In February, Varadkar backed better tax rules for landlords, tellings reporters that there had been a “demonisation” of landlords in recent years.
“Lots of people need to rent for lots of different reasons. And for that reason, we need landlords. The State is a landlord to providing social housing and cost rental institutions and also small landlords as well,” the Taoiseach said.
“I think it’s a good idea that we should improve the tax treatment of landlords, particularly small landlords to encourage them to stay in, to encourage them to come into the market.”
A report from the National Economic and Social Council, which went to Cabinet earlier this year, recommended that the tax treatment of landlords be improved but that it should be linked with longer tenancies.
It states that “the improved tax treatment of rental income for private landlords could be introduced and there is a case for linking this to more secure occupancy for tenants”.
However, McGrath has warned that any changes to the tax treatment of landlords needs to be targeted to ensure it has the intended effect.
“While the use of tax measures to retain landlords in the rental market or increase supply may be well-intentioned, Ireland’s history shows that the issue of property-based tax expenditures should be approached with caution,” McGrath said, responding to a Parliamentary Question from Fine Gael TD Emer Higgins.
“It is therefore important that any proposals regarding further new reliefs are carefully thought out to ensure that they are targeted and have the intended effect.”
McGrath added that any decision on additional tax relief for landlords would not be made until Budget 2024 in October.
Changes to tax treatment for landlords had been a hot topic last year, with widespread expectations that the Government would introduce measures as part of last September’s budget.
However, measures did not materialise and have been pushed back until this year.
Renters are likely to see benefits in the next budget, with O’Brien previously telling The Journal that the rent tax credit is likely to be continued and potentially increased.
The Housing Minister said that the €500 credit, which was claimable for both 2022 and 2023, was just a starting point.
“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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