Dáil Éireann Debate, Wednesday - 1 March 2023
59. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will outline the reason tenants who have a formal rental agreement that is registered with the RTB, but who are renting off a family member such as a parent, are precluded from getting the rent credit via the Revenue Commissioners; and if he will make a statement on the matter. [10431/23]
Amharc ar fhreagraThe rent tax credit was introduced under Finance Act 2022 and is, subject to a number of conditions, broadly available in the following three circumstances:
1. where the claimant makes a qualifying payment in respect of a residential property which he or she uses as his or her principal private residence;
2. where the claimant makes a qualifying payment in respect of a residential property which he or she uses to facilitate his or her attendance at or participation in his or her employment, office holding, trade, profession or an approved course; and
3. where the claimant makes a qualifying payment in respect of a residential property which his or her child uses to facilitate his or her child’s attendance at or participation in an approved course.
One of the conditions attached to the credit relates to the relationship between the claimant, tenant and landlord.
Where the relationship between the claimant and the landlord is that of parent and child, or vice versa, the rent tax credit will not be available in any instance. This will be the case irrespective of the nature of the tenancy concerned and its Residential Tenancy Board registration status.
The rationale behind the prohibition on tenancies of this nature is that if such arrangements were allowed to qualify for the relief, it would leave the tax credit open to possible manipulation where parents and their children could collude to create a tax advantage for either party, which was not warranted.
Where the claimant and the landlord are otherwise related, such as grandparent and grandchild, siblings or aunt/uncle and niece/nephew, the credit is available only where:
1) the tenancy is of a type which is required to be registered with the RTB, and 2) the landlord has complied with any such registration requirement.
The credit is not available in these circumstances where the tenancy is of a type which is exempt from RTB registration, such as a ‘rent-a-room’ or ‘digs’ type arrangement.
Further details in respect of the rent tax credit, including comprehensive guidance on the eligibility criteria, can be found in Tax and Duty Manual Part 15-01-11A at the link below:
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-11A.pdf
The operation of the Rent Tax Credit will be closely monitored by my Department in conjunction with Revenue in the coming months and the question of whether any further adjustments are needed will be considered in the context of the Budget and Finance Bill process later this year.
