February-01-2017 in Property
The High Court has ruled in favour of a landlord and held that the NPPR (non principal private residence) charge is deductible against rental income.
In a recent case, a landlord sought to deduct €1,200 worth of NPPR on six rented properties from his rental income. He relied on s. 97(2) Taxes Consolidation Act 1997 which allows deductions from rental income for “any rate levied by a local authority”.
The High Court ruled against the Revenue Commissioners and allowed the deduction on the basis that the NPPR charge is a “rate levied by a local authority” (and not a national tax, e.g. Local Property Tax) because the money from the NPPR charge “flows directly into the coffers of local authority” and not to central government.
Interestingly, the High Court also held that use of the word “any” suggests that the law was drafted to provide prospectively for rates which might be imposed at some time in the future and hence may too be deductible from rental income.
While this decision is limited to the deductibility of the NPPR charge from rental income, it has a wider significance and it could pave the way for future cases to be taken by landlords who feel aggrieved at being double taxed on their rental income by local authority charges.
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