Irish “caring” Budget re-introduces 100% mortgage interest tax relief

The Finance Minister for Ireland, Paschal Donohoe, described his budget as a “caring” budget that will secure Ireland’s future. Donohoe confirmed landlords would receive relief of up to 100% of the interest paid on loans for the purchase or refurbishment of residential property.

100% interest relief has been brought forward to come into effect on 1 January 2019 instead of the planned date of 2021. Currently only 80% of interest can be claimed as relief by Irish Landlords.

The Housing Minister, Eoghan Murphy, said this was decided to “incentivise landlords to remain as landlords”.

Predictably this was accused by opposition parties as “a landlords’ budget from a landlords’ government” and “an unnecessary tax relief to landlords who can buy a house for cheaper than a family”.

The Irish Times reported on the announcement saying: “The measure is seen as a step by the Government to encourage landlords to stay in the market, amid claims that high tax burdens were forcing them to sell up to owner-occupiers. It is also probably hoped that a more favourable tax bill will mean that landlords may hold back on rent increases, given the sharp upward momentum in the rental market.”

Savills Ireland director, John McCartney, predicted this would increase demand for apartments from investors adding “In turn this should underpin developer confidence and encourage further apartment building.” He did however warn that increased competition for properties from investors could also lead to an inflationary pressure of prices.