BUDGET 2012: PROPERTY TAXES
Flowing from Tuesday’s Budget, high earners can expect further restrictions on property tax reliefs and every buy-to-let investor can expect more reductions in the amount of mortgage interest they can offset as an expense against rental income, The Sunday Business Post reports.
However, the newspaper says the Government is ruling out the wholesale abolition of Section 23 property reliefs because of the likely knock-on effects of further mortgage defaults and bank losses.
Thousands of middle-income investors bought at the height of the boom on the basis that Section 23 relief would extend to all of their properties, according to the Irish Property Owners Association (IPOA).
“People bought from every single walk of life, and many released equity from their private homes,” Margaret McCormick of the IPOA told the newspaper. “If the Section 23 relief was withdrawn, it would be a disaster for property owners, who would not be able to service their debt, and for their banks. The private rental market is already under severe strain.”
However, the 56% of claimants earning more than €100,000 certainly do not fall into this category and this group is now firmly in the Government’s sights. In the Programme for Government, Fine Gael and Labour both said they would “reduce, cap or abolish property tax reliefs and other tax shelters which benefit very high income earners”.
Finance Minister Michael Noonan will publish a report on property reliefs to coincide with the Finance Bill in January.