Ireland has abandoned its 2009 policy that abolished tax relief on buy-to-let mortgages and, according to an October 2016 Telegraph article, campaigners say that Britain’s chancellor should do the same.
Michael Noonan, Ireland’s Minster for Finance, said that from next year, landlords would be able to claim 80 per cent tax relief on mortgage interest payments. This is up from the current 75 per cent. The rate will rise by 5 per cent in the next few years until it reaches 100 per cent.
In Britain, landlords will soon be able to receive a maximum 20 per cent tax credit on their mortgage interest payments. Currently, landlords who pay tax above 20 per cent can claim tax relief based equal to their personal tax rate. Landlords who pay 40 per cent or more tax will lose income.
The decision by the Irish Government has prompted British anti-tax campaigners to claim that it is proof that the tax does not work In Ireland. Following the tax changes, landlords put up rents to cover the tax relief reduction. Investment in buy-to-let properties fell and fewer commercial mortgages were offered for them. Campaigners predict that the same will happen in Britain.
Some renters’ right groups have claimed that reducing the number of rental proprieties could encourage more first-time homebuyers to come to the fore.
A recent judicial review brought by a group of landlords failed to get the tax relief reductions abolished.