From the 7th of April 2009 the tax relief for landlords on mortgage interest paid on debt used to purchase, improve or repair a residential property has been restricted to 75% of the interest incurred in the year. With effect from 1 January 2017 the amount restricted increases to 80%.
The restriction will increase by 5% every subsequent year until the full 100% of interest incurred is allowable. Landlords will therefore be entitled to a full interest deduction with effect from 1 January 2021.
For landlords renting properties to tenants availing of Housing Assistance Payment (HAP) scheme, 100% of the mortgage interest can be claimed on condition that an undertaking is given that the property be rented to HAP tenants for at least 3 years. Mortgage interest is claimed, subject to the above restrictions, in the first 3 years of the tenancy. The balance up to 100% of the relief can be claimed by the landlord in the year following the expiration of the three-year tenancy.
Landlords should note that the availability of the interest deduction is still dependent on the tenancies being registered with the Residential Tenancies Board.
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When considering this EU decision to the effect that APPLE owes €13 Billion in taxes, two over-riding factors need to be borne in mind:
It is not good. It paints Ireland as a tax haven which facilitates multinationals to avoid paying large sums of tax in other jurisdictions.
This was re-in forced by Oxfam’s report on tax havens published this week.
The Commission has exceeded its powers and misinterpreted both Irish Tax Law and practice and also EU State Aid Legislation.
In addition, the EU is seeking to impose 2016 rules and regulations on matters that took place many years ago when national and inter-national tax practices were very different.
In 2014 the General Court ruled against EU Commission’s state aid case against the above three companies. The reason the General Court found in their favour was based on the nature of how state aid is defined. This will be critical in the Irish case.
For a tax concession or a tax ruling, such as that given to Apple, to qualify as illegal state aid, four criteria must be fulfilled:
Both Ireland and Apple have lodged appeals. Only one thing is sure the lawyers will make loads of money as this case winds its way through the different EU judicial layers and will end being adjudicated by General Court of the European Court of Justice in Luxemburg (another country with plenty of controversial tax rulings).
We are happy to help. Please post your comment below or contact Gerry Higgins, Tax Partner on 01 677 9000 or by email: firstname.lastname@example.org.
Default interest and penalty clauses were revisited by the Irish High Court recently in two connected cases.
Both cases taken by the plaintiff, Breccia, related to loans that which were initially granted by Anglo Irish Bank Plc and were since sold to a third party fund.
The loan agreements provided for the application of surcharge interest at a rate of 4% on amounts unpaid. The relevant provision was contained within the standard terms and conditions for the loans and had the effect of doubling the interest payable.
A central issue in both disputes was whether the inclusion of default interest in the loan redemption figures constituted a penalty and whether the application of any such default interest was, as a result, unlawful and unenforceable.
In Ireland, the leading authority on penalty clauses is ACC Bank Plc v Friends First Managed Pension Funds Ltd & others (the “ACC case”). In that case the court found surcharge interest rates to be penal in nature where such rates could not be considered a “reasonable pre-estimate” of likely loss in the event of a default.
Recently the UK Supreme Court in the Cavendish decision handed down Read more