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OFFICIALS WITHIN THE Department of Finance warned against the tax break for landlords that was introduced in Budget 2024.
Department officials also estimated that more than one in four landlords will pay no income tax on the rents they charge as a result of the tax break.
The documents were released to Sinn Féin under the Freedom of Information Act.
Landlords will be entitled to have rental income of up to €3,000 tax free at the standard rate (20%) in 2024.
This will rise to €4,000 in 2025 and €5,000 for years 2026 and 2027.
This means a 20% saving on each amount per year.
So, next year landlords will get tax relief of €600. This will rise to €800 by 2025, and €1,000 for 2026 and 2027.
The relief will reduce the tax due on rental income by up to €600 in 2024, €800 in 2025, and €1,000 in 2026 and 2027.
However, it will be clawed back if the landlord leaves the rental market between 2024 and the end of 2027.
In documents prepared by senior officials within the Department and released under the FOI act, there was an original plan to allow landlords a rental income tax disregard of up to €10,000.
This was later scaled down to €5,000.
The documents also noted that “there is already a significant amount of tax relief available to individuals who are landlords” and advised that the Tax Division did not recommend a rental income disregard.
It was further stated that “Ireland’s past experience with tax incentives in the property sector strongly suggests the need for a cautionary stance in this area”.
A second document re-iterated these concerns and stated: “A tax relief will only work in this regard if tax is a primary factor causing people to exit the rental sector and a primary factor in dissuading people from entering it.
“The evidence available does not appear to support this case, as such, it raises the question how effective tax relief will be in achieving this aim.”
Department officials reference a Residential Tenancies Board report from June 2021 that found only 6% of small landlords cited taxation as a motive for leaving the market.
A later document then called for the tax relief to have a “sunset clause of three years to end in 2026 as is standard practice as it is required by the Department’s Tax Expenditure Guidelines”.
However, Finance Minister Michael McGrath decided that “on balance” a period of three years is too short.
He proposed that the relief be extended for four years, to 2027.
Commenting on the documents, Sinn Féin’s finance spokesperson Pearse Doherty said: “In reality, thousands more landlords will be able to reduce their tax liability to zero after claiming existing capital allowances.
“Officials were also right to warn that this tax break raised serious issues around fairness for our tax system – why should nurses, gardaí, teachers and other workers pay more tax than landlords will on their rental income?”
Doherty also remarked that “Department officials were clear in their advice that this tax break is unlikely to have any impact in preventing some landlords from selling their properties”.
Doherty accused the government of ignoring all the “evidence and advice from their own officials that this tax break was unfair, costly and ineffective” and remarked that “government pressed ahead with an unequitable sop to landlords that will do nothing to increase housing supply or improve affordability”.
There should be zero tax on rental income for one house. If you own a few houses, fair enough to tax that. I can earn €800/month TAX FREE if I rent my house to Ukrainian refugees but I am taxed at 20% if I want to rent to a local Irish family and I also cannot evict them if needed. Guess which I would choose?
@MTB Mayo: The eviction laws are the same for both so this is not a differentiating factor.
I’d imagine you would charge the going market rate, (average rents in Ireland being more than €1500) as this would be more profitable than the €800 tax free limit. These factors alone would dictate that you rent to the “local Irish family”.
@MTB Mayo: So you have one rental property and believe there should be no tax on income for those who own exactly one rental property? Hmm
@Kevin Collins: where are u getting €1500 maybe in Dublin 2 Bed appartment €650
I only rent to professional males on at least 80k per year. Everyone else is pure hassle
@MTB Mayo: Absolutely Right
Need to ban these middlemen capitalists. Social housing is 15% of wages, when we removed the middleman landlord.
A UK fund bought 85% of a Dublin housing estate originally aimed at individual buyers.
What could have been Irish owned family homes, these landlords offset their mortgage onto struggling tenants, leasing for 3,175 per month.
@9QRixo8H: but some people wish to rent, how would they get a private rental property if they didn’t qualify for social housing?
Open up social housing for all incomes. We had mass social housing built in the 50s and 70s where everybody got housed, affordably.
Now those council houses are being sold to middlemen landlords who are charging capitalist prices to rent out social houses, thanks to FG privatising social housing.
@9QRixo8H: social housing for all? Wow, you are aware of the levels of begrudge in this state and to try and push through social housing for high earners would be impossible, unworkable.
Okay then keep paying capitalist prices for social housing
@9QRixo8H: it’s very odd, you keep talking about capitalist prices, but yet you would want the highest earners of a capitalist economy to be entitled to social housing in a capitalist society, do you even think about what you are writing?
@9QRixo8H: I wish 15% more like 25
@Paul Fahey: highest earners wouldn’t give up 15% of their wages to live in a council house though, would they?
@9QRixo8H: cry harder lefty
@declan costello: errrr, I think they might given that it is 17% of principal earners assessable weekly income, which in most cases would be far cheaper than private rents or mortgage payments. Further, given the posters suggested ban on private rentals they may have to.
I can get €800/month TAX FREE if I lease my house to Ukrainian refugees. I would get taxed if I rent my house to a local Irish family.
@MTB Mayo: so you are willing to rent your house to an Irish family for 800 a month if its tax free ?
@Ronan Meagle: I think they’re trying to make the point if they are Ukrainian, you’re gonna get the first 800€ of any rent tax free. Meaning Irish and other nationals will find it harder when competing for rental accommodations as alot of landlords will see it as a no brainer.
Of course the FF minister would give tax breaks to landlord class.. ie.. his friends in FFG.
@Willie Marty: and the Sinn Fein landlords? What about them?
@Alan: they wouldnt be in the same league.Now i know you are anti shinner but if you had mentioned independents like the Healy Raes for example you might have a point.
@Willie Marty: yes, them too (are they actually millionaires. I think they may be). My point is that singling out ff and FG misses the obvious, which is that this goes beyond the govt parties. As a PBP voter I can confidently say there aren’t too many landlords in the party or among the members!
@Willie Marty: us wonderful landlords deserve a tax break, we are truly awesome capitalist and the best people in society :)
@Pete Murray: go back to bed Pete
McGrath conveniently ignored the fact it was under the government of FF/ Greens who facilated in the economic destruction of this country when they facilated the gangsterism of the banks and developers. FG/ Labour added to the mess…inviting vulture companies to run riot…NAMA who’s dodgy deals were brushed under the carpet…Housing and Rental crisis are a direct result of the policy of FFG/ Greens…..McGrath like his boss Martin seems to suffer memory loss….Remember when Martin stated in the Dail..There was no bank bailout…Sweet Jesus.
Usual irish government cock ups.
A solution, but not “the solution” to the housing crisis, because we simply have to build ore houses is this:
1. Get rid of the high rental tax for landlords, make it progressive
2. Get rid of HAP altogether and give only to the disabled, pensioners and certain really vulnerable people, not just someone earning minimum wage. The government is acknowledging that wages are not enough so “help” is needed from the government.
3. Tackle illegal rentals by students, mostly Brazilians with student visas who can’t qualify for HAP that are living 2-3 people in a room paying €500 each, making landlords a lot of money by squeezing 6-9 people in an apartment. And if these rentals are legal make laws to discourage such types of lettings.
The moment this is tackled, a lot of people will struggle first, yes, but unfortunately, a radical solution is needed. As long as the government keep paying the game by bumping people to meet the insane landlords demands, this will be a vicious circle.
The moment HAP is gone as well as the renting of 2-3 people per room, the landlords will have no choice but to lower their prices, why? Because there are only so many doctors and IT professionals that can afford to pay the full asking price of a house without any government help, people simply won’t be able to sign a lease, landlords would either cop on and reduce their rents by at least half, or sell their property, so let someone else buy it, if not let the government buy them. A house is a right, not a privilege, there should be a house affordable for the minimum wage as well as for the entrepreneur, all without government help.
There is no way to reduce income tax to zero on rent, unless the landlords TOTAL income from ALL sources is less than €18k
More SFIRA lies pandering to the idle classes.
I think 2024 us wonderful landlords should introduce viewing fees when renting a property. 100 Euro to view a property seems fair
The only people who should get a tax break are the renter .. they should be able to claim back tax 100% on rent paid its already been taxed as income.. let it be taxed as income for the landlord. If it’s a single property it needs to be set up in a trust to be tax free on earnings if ownership is for pension planning
To all my fellow wonderful landlords, its January so make sure you increase rents, let the far left haters hater, just laugh in their face lol
@Bass Bass Is A Bell–end: cash is king
The FFG way
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