Budget to deliver give tax incentives to small landlords

The Government has signalled that it will be offering tax incentives to small landlords to remain in the rental market. It comes as the Irish Property Owners Association (IPOA) has repeated its call for the introduction of a 25% rate of tax on residential rental income inclusive of the Universal Social Charge (USC) and Pay-Related Social Insurance (PRSI).

Minister for Finance Michael McGrath hinted at a change last month but the exact details of the plan have not yet been finalised and are expected to be announced as part of Budget 2024.

“We have seen too many landlords exit the market. It’s not always because of tax reasons, but tax can be a factor in some cases,” he said, adding that rising interest rates and some property owners coming out of negative equity and deciding to exit the market were also factors.

The Housing Minister, Darragh O’Brien, earlier this month also stated that changes need to be made to how landlords are taxed in order to prevent landlords from exiting the rental market and in order to attract new ones.

The Minister hopes to get changes rubber stamped as part of this year’s Budget, as well as for further supports for renters through the rent tax credit. He said it is “crucial” that the change is made.

The chair of the IPOA, Mary Conway, this week responded to the increasing speculation that Government is considering a lower tax rate to retain landlords in the rental market

She said that the 25% tax rate is “urgently required” to keep landlords in the residential property market.

“This innovative approach to taxation would encourage private investors and homeowners to remain active in the property market and stimulate new investment in the rental sector,” said Ms Conway.

The IPOA contends that property owners are willing to remain active in the rental market if this measure is included in Budget 2024.

“The association is calling on the government to implement this fiscal policy as a priority to enable property owners to continue to play a pivotal role in alleviating the severe rental crisis currently affecting our country,” said the association’s chief, emphasising the role that landlords play in the provision of residential rental supply.

“The vast majority of property owners already pay considerable taxes, so fair taxation would be a helpful counter-balance to the increasing regulatory burden being imposed on the sector. The IPOA remains committed to working collaboratively with the government to develop effective solutions to the housing emergency, so together we can create a more sustainable and robust rental housing sector,” concluded Ms Conway.