The Irish Property Owners Association (IPOA) and Institute of Professional Auctioneers and Valuers (IPAV) are proposing a new 25% tax rate on all residential rental income to help stem the exit of small landlords from the market.
According to the organisations, the tax lost as a result of lowering the current rate from 55% to 25% could be made up by widening the net to include investment funds and Real Estate Investment Trusts (REITs).
The two organisations stated in a joint statement that “It is entirely inequitable that two different investors both providing identical product and services can have such disparity in tax treatment.”
“The private investor is taxed at a marginal rate of up to 55% whilst the private equity fund/REIT pays 0% tax on rental profit, once they exit the market within a defined period.”
“While this practice is riddled with imparity for our members, it is the loss to the Exchequer that is astounding when one considers that some REITs continue to make rental profits totaling hundreds of millions of euro.”
They estimate that were this approach taken, it would have cost neutral to the exchequer.
The two organisations will appear before the Oireachtas housing committee today to talk about the difficulties the private rental sector is now facing.
In preparation of today’s hearing, a submission was filed to the committee that includes the suggestion.
“The private rental sector has an important role to play in the provision of homes,” said Committee Cathaoirleach Deputy Steven Matthews.
“There are a number of developments in the sector that concern the Committee.”
“These include increasing rents outside pressure zones, a fall in the number of properties available to rent, the number of notices to quit being issued by landlords and the growing number of landlords selling properties and exiting the sector.
Data suggest that there are not enough houses on the market that are available for rent.