Use the tax system to help alleviate housing crisis

Jun 13, 2019

Give landlords reasons to stay in the residential market: Accountancy Profession’s pre-Budget submission calls for sustainable tax reforms

If many of Ireland’s homeless are finding themselves without a home because of landlords selling up their rental property, something urgently must be done to keep landlords in the rental market.

Speaking at the launch of CCAB-I’s pre-Budget 2020 submission to the Department of Finance, Public Policy Manager at Chartered Accountants Ireland, Cróna Clohisey said “Landlords are an essential feature of a fully functioning residential property market.  But many are part-time, accidental landlords, are heavily indebted and face crippling tax bills which they cannot afford to pay.  Faced with a choice between a 52% tax burden and rising property prices, many are choosing to exit; leaving their tenants in a stark position.  This problem was highlighted further by the Focus Ireland research published this week” 

This exit puts unprecedented strain on the housing market where rising house prices also mean would-be purchasers are at the same time being pushed into the rental market.  Chartered Accountants Ireland recommends changing the tax system to keep these landlords in the market and have asked the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, T.D. to consider proposals in the profession’s pre-Budget submission.

The Institute is very clear that it does not want to see a return to an era of “Section 23” type reliefs. “The problem with property reliefs is that the market became flooded with small property investors who were average earners and purchased houses and apartments on the back of tax reliefs which were not sustainable.  Instead we want to see a more measured approach to tax reliefs. For example, allow Local Property Tax as a deduction against rental income. Encourage landlords to repair their properties by giving a tax write off for expenditure incurred over 4 years rather than the current 8 years. Enable landlords to offset rental losses against other income like the self-employed can,” said Ms Clohisey.  

Back in April 2017, the Department of Finance had a public consultation on the tax treatment of landlords and in the two years since, with no response from the Department, calls for change seem to have gone unheard. 

“In order to have an effective consultative process, we need to see tangible evidence that suggestions are being listened to and are being considered. We haven’t seen this when it comes to the rental market. With over 10,300 people homeless in Ireland and with current building levels not even close to the 51,724 units built in 2008, we are calling for urgent action.  Reforming the tax system for landlords would be a good start for citizens.” said Ms Clohisey.

ENDS

Notes to editors

Reference: Claire Percy, Chartered Accountants Ireland, M: 086 216 4393, claire.percy@charteredaccountants.ie

About Chartered Accountants Ireland

Chartered Accountants Ireland is Ireland’s largest and longest established professional body of accountants founded in 1888.  The Institute, which is an all-island body, currently represents over 27,000 members around the world.

Chartered Accountants Ireland under the auspices of the Consultative Committee of Accountancy Bodies Ireland (CCAB-I) submitted its pre-Budget 2020 submission to the Department of Finance this week.  Copies of the submission, which also covers ideas to boost the Irish SME sector, are available here.