Last October 20, 2016
As the UK prepares to change the way landlords are taxed by scrapping the existing rules that permit them to offset all of their mortgage interest from property investments against tax, Ireland has announced that it is reversing its policy that prevented landlords from claiming full mortgage interest tax relief on rental income to help stop rents soaring out of control.
In his Budget statement made last week, Ireland’s minister for finance, Michael Noonan, said landlords would be able to claim 80% tax relief from next year, up from an existing level of 75%.
Tax relief will then increase by a further 5% a year until it reaches 100% again.
Noonan highlighted the fact that the policy, which is similar to the tax changes due to be introduced in the UK from April next year, was introduced in Ireland in 2009 to “rescue the public finances” but with investment in Ireland’s private rented sector falling now is an “appropriate time” to revisit it.
Around 440,000 basic-rate tax payers will be forced into a higher tax bracket from April next year once planned changes to landlord taxation comes in to force, according to the National Landlord Association (NLA).
The existing rules that permit landlords to offset all of their mortgage interest against tax will, from April 2017, be phased out, restricting the amount of mortgage interest landlords can offset against tax on their property investments.
By 2020, landlords will not be able to deduct any of their mortgage interest from their rental income before calculating their tax bill.
The changes to tax relief will make it harder to make a profit from letting property, which in turn could deter investment in the sector.
Campaigners against the mortgage interest relief changes argue that Ireland’s change of policy demonstrates that the levy does not work.
Rents in Ireland have increased significantly since 2013, with recent figures from the Irish Residential Tenancies Board revealing that rents in Ireland have risen by almost 10% since last year.
Here in the UK, many landlords will have no alternative but to recoup their losses through higher rents, with tenants paying the price of the government’s tax-grab.
Research conducted by Property118 earlier this year revealed how up to 4.6 million tenants could be affected by the now former chancellor George Osborne’s tax attacks on buy-to-let landlords.
Mark Alexander, founder of Property118, told the press this week: “Ireland has got a really big problem with reduced investment in property at the same time as rents have increased dramatically.”
https://www.landlordtoday.co.uk/breaking-news/2016/10/irelands-decision-to-scrap-buy-to-let-tax-is-a-warning-to-britain
No comments:
Post a Comment