Fianna Fáil has urged Minister for Finance Michael Noonan to give some relief in the budget to tens of thousands of householders forced to rent out their own homes because they cannot afford the mortgages.
The party’s finance spokesman, Michael McGrath, has said people in this “forgotten generation” in their 30s and 40s are in negative equity and cannot sell their homes because of the debt overhang. They end up renting cheaper accommodation themselves, either in the same location or elsewhere if they have relocated for work, and rent the principal residence to help pay the mortgage. Mr McGrath said many were not aware of the legal and financial consequences of that move.
Their obligations include income tax, PRSI and universal social charge on rental income, the non-principal private residence tax and fees to the Private Residential Tenancies Board. In addition, mortgage-holders who move out of their homes could be in danger of losing tracker rates on their mortgages.
There is some evidence to suggest some of these people are not declaring their rental income for tax purposes. This, Mr McGrath said, could lead to “huge problems” for them in the future.
“I am calling on the Government to recognise that these people are in a special category. They are not property investors or landlords. They have had to leave their own home because they could not sell it and are renting themselves while renting out their own [flat or house].”
He said the Fianna Fáil submission on the budget would call for a number of measures to help this category of people, including a three-year offset of rent paid against rental income, as well as some assurance in relation to tracker mortgages.
Anti-avoidance measures
Mr McGrath has calculated that the rental relief would cost some €20 million in the first year of operation. He said it would involve a change to the tax code but that the Government could add anti-avoidance measures to make sure the relief is properly targeted.
His call came as the Department of Finance responded to the criticism of Labour TD Kevin Humphreys that the Fiscal Advisory Council was being given access to sensitive Government projections three weeks ahead of the budget, which the finance committee of the Oireachtas was not allowed receive.
In a statement the department said the sharing of information was a legal provision of strict new EU requirements that draft national budgets must be based on independent macroeconomic forecasts. "This is not specific to Ireland: all EU member states must do this. The Government assigned the endorsement function to the Irish Fiscal Advisory Council, " it said.
“The point of the endorsement function is to ensure that an independent fiscal body considers the economic forecasts as realistic. This precludes the possibility of Government bias being reflected in the macroeconomic forecasts,” it added.
