Irish Property Owners Association accuses the Government of “taxsault” or assault by taxation

The Irish Property Owner's Association issued two press releases in January. The second one on the 30th January caught the attention of The Irish Times property section on Thursday because as they put it the association has invented a new verb "to taxsault"

Here is the Press release "LANDLORDS “TAXSAULTED” BY GOVERNMENT - The Irish Property Owners Association (IPOA) have accused the Government of what they call “taxsault” – assault by taxation.

In a strongly worded letter to the 50 TDs and 21 Senators who are themselves private residential landlords, the IPOA said that there has been a “grave injustice” to the providers of private rental accommodation for 700,000 people.  “The litany of unfair taxation continues,” said IPOA Chairman, Stephen Faughnan. “Landlords are being required to pay the €200 tax on Non-Principal Private Residences in March, followed by a so far indeterminate Local Property Tax in July, followed again by a so far indeterminate amount of Water Charges next year.”

Mr. Faughnan said that Oireachtas Members have labelled the situation as “ludicrous” given that these are all expenses in the provision of private rental accommodation, and yet cannot be claimed as such against rental income.  “Minister Noonan told the Dáil that the property tax would be tax deductible, and then announced that it would be phased in.  Either it is a legitimate expense or it is not.  It is a bit like a woman saying she is a little bit pregnant, or like the familiar saying attributed to St. Augustine:  God, make me good – but not yet.  If it is a legitimate expense, it cannot be just phased in as if it is some concession.”

An IPOA analysis of Oireachtas Members from the last available Register of Interests (2011) showed that in the Dáil, there are 50 private landlords out of 165 Members (one vacancy) which represents 31% of Members.  Broken down, there are 30 in Fine Gael (including 8 Ministers), 5 in Labour (including 1 Minister), 9 in Fianna Fail, and 6 Independents. 

In the Seanad, there are 21 out of 60 Members, representing 35% which breaks down into 7 Fine Gael, 3 Labour, 7 Fianna Fail and 4 Independents."

A week earlier the first press release appeared:

"LANDLORDS WELCOME TAX DEDUCTIBLE PROPERTY TAX - The Irish Property Owners Association (IPOA) welcomed clarification from the Minister for Finance that the Local Property Tax, due to apply from the summer, will be a tax deductible expense from rental income.

“At last, there is some tangible recognition for landlords, who are providing an essential service in housing 20% of people in Ireland (700,000)”, said Stephen Faughnan, Chairman of the IPOA.  “However, we are concerned at the Minister’s suggestion that it will be introduced on a phased basis.”

Responding to a Parliamentary Question tabled by Deputy Finian McGrath (Independent, Dublin North-Central), the Minister said:  “The Thornhill Group recommended that the Local Property Tax (LPT) paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates. This is not provided for in the Finance (Local Property Tax) Act 2012, but it is the intention of the Government to introduce such a provision on a phased basis.”

The IPOA have been campaigning for all local service charges to be tax deductible and have questioned why the LPT provision would not be introduced at the same time as the new tax.  “It makes no sense to say that an expense, which is clearly a business expense, should be delayed in being allowed against rental income,” said Mr. Faughnan.  “Landlords have already been penalised by the refusal of expense status for the Household Charge and the Non-Principal Private Residence Charge, not to mention the refusal of expense status for 25 per cent of interest paid on borrowings. We hope the Minister will act speedily with this proposal.” Source IPOA

It is a great shame that the Government is not stating in legislation that tenants must pay for water, property tax etc as they do in countries like France and the UK and in the event of the landlord having to pay these taxes and charges the landlord gets full tax relief as an expense. If the landlord has to end up paying for water, it could cost the landlord a small fortune particularly as this service is on meter and tenants knowing that the landlord is paying might just leave the tap turned on unlike when he or she is paying for gas and electricity.

More useful information at the IPOA website Here