Parliamentary Question addressed to the Minister for Finance

To ask the Minister for Finance if he will consider in the upcoming budget the case of buy to let landlords in circumstances where the formula used to subtract losses from 25% of interest paid to the bank Budget 2011 may result in taxable gain; and if he will make a statement on the matter?

Reply

I am assuming that the question relates to the interest restriction applying to residential lettings, whereby the deductibility of interest in computing taxable rental income from residential property (insofar as it would otherwise be allowable) is limited to 75% of such interest.

This restriction was introduced in the April 2009 supplementary budget as part of an urgent revenue-raising package aimed at stabilising the public finances. The reduction in the level at which interest could be claimed for residential rental properties reduced the cost of this relief to the Exchequer by an estimated €95 million in a full year.

The context in which the 2009 measure was introduced, i.e. the need to stabilise public expenditure, still exists. Under the terms of the EU/IMF Programme of Financial Support for Ireland, the State is committed to further substantial reductions in public expenditure.