Donegal TD Pearse Doherty has slammed an “unjustified” tax break for landlords which will see over 40,000 landlords pay no income tax on their rental income.
The Sinn Féin Finance spokesperson was speaking following information he received under Freedom of Information, which shows that Department of Finance officials warned against the introduction of the tax break in Budget 2024.
The move, brought in to keep small landlords in the market, gives landlords a boost of €1,000 a year by 2026.
Deputy Doherty criticised the Government and the Minister for Finance for a move that, he said, “will do nothing to increase housing supply or improve affordability”.
He said: “Officials warned that such a tax break would have substantial deadweight costs and would be ineffective in retaining landlords in the rental sector.
“They also drew comparison to boom-time tax breaks, warning that ‘previous experience in the not too distant past was that such measures were ultimately disastrous’.
“Worse still, officials estimated that more than one in four landlords will pay no income tax whatsoever on the rents that they charge as a result of this tax break.
“In reality, thousands more landlords will be able to reduce their tax liability to zero after claiming existing capital allowances.”
Deputy Doherty said he believed that officials were right to warn about this tax break, citing research which showed that only six percent of landlords who had sold their properties gave taxation as a primary reason for selling.
He said: “Officials advised that a primary factor causing many landlords to sell their properties is the dramatic rise in house prices under Fine Gael and Fianna Fáil, with many landlords now seizing the opportunity to sell at a profit.
“As former economist of the ESRI, Professor Barra Roantree said at the time, this unfair tax break for landlords may be the stupidest tax relief of recent times.
“Given what we and the government know, recent comments by Minister Darragh O’Brien that landlords will need more tax breaks make clear how out of touch this government is.
“Despite all the evidence and advice from their own officials that this tax break was unfair, costly and ineffective, the government pressed ahead with an unequitable sop to landlords that will do nothing to increase housing supply or improve affordability.”
