Brokers urge rent tax breaks to spur empty nesters to ‘downsize' larger homes
Such a scheme could incentivise people who are 'reluctant' to move but who may live in a four-bedroom house where they only use one bedroom, said Brokers Ireland in a submission to Finance Minister Paschal Donohoe.
Under such a scheme the rent paid on the new smaller property would be offset against the rental income they receive by renting out their own home.
This would mean that such a person would only pay tax on the difference in rental levels, said the submission from the organisation which represents over 1,200 insurance firms and financial brokers across the country.
They may be reluctant to sell their home and buy a smaller one but they may be interested in renting a smaller property
'Many older people who own their own homes may live in a property which is too large for their current needs, particularly where children have moved out,' said the submission.
'They may naturally be reluctant to sell their current home and buy a smaller property, but they may be interested in renting a smaller property to downsize to if they can let out their own home at a higher rental level,' it said.
Rachel McGovern, deputy chief executive at Brokers Ireland, said the group was also proposing a series of changes to what she labelled 'discriminatory tax policy' that was leading to heavy losses for Irish consumers.
'When account is also taken of the fact that a 41pc tax rate applies on gains from life-assurance savings and investment policies in contrast to the Capital Gains Tax rate of 33pc applying to stocks, shares and property, one can see that the situation is particularly costly,' she said.
The group has also demanded the abolition of the 1pc Life Assurance Premium Levy, as was recommended last October by the Department of Finance's own review of the Irish funds industry.
The group is also seeking a reduction of the life-assurance exit tax rate from 41pc to 33pc, the CGT rate
This was promised in the Programme for Government but there is widespread concern that many post-election promises will fall by the wayside because of concerns over the impact of tariffs and trade issues on the economy.
The levy, which amounts to €33m per annum, was introduced in April 2009 as a temporary measure in April 2009 to plug a major hole that emerged in the public finances during the financial crisis.
'The continued application of the 1pc levy on life-assurance premiums distorts the personal investment market in Ireland,' it said.
The charge was 'unique and discriminatory' to savings and investments made in life-assurance policies, it said.
The group is also seeking a reduction of the life-assurance exit tax rate from 41pc to 33pc, the CGT rate, a measure recommended in the funds review.
Another measure sought ahead of this summer's budget is the introduction of a reduced life-assurance exit tax incentive rate of 25pc for 'responsible investment products' to stimulate increased appetite for funds that prioritise environmental and social issues amongst the Irish public.
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