Written answers

Wednesday, 1 March 2023

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
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59. To ask 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]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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The 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.

Photo of Pádraig Mac LochlainnPádraig Mac Lochlainn (Donegal, Sinn Fein)
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60. To ask the Minister for Finance if the rental tax credits introduced by the Government apply to parents of a student from this State but now renting and studying in a recognised third level course in the North of Ireland. [10463/23]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Finance Act 2022 introduced the Rent Tax Credit, which is provided for in s. 473B of the Taxes Consolidation Act 1997. This is an income tax credit of up to €500 per year (or up to €1,000 for jointly assessed couples) which may be claimed in respect of qualifying rent paid in 2022 and subsequent years to end-2025.

In relation to the question of parents paying rent for their children who are studying and in a tenancy outside the State, the purpose behind the rent tax credit is to assist as part of the overall response to the accommodation shortage in the private rented residential sector within the State. More specifically, the aim is to provide some financial assistance to renters in that particular sector who may face high rental costs and who do not receive any other housing supports from the State. As such, the eligibility criteria for the credit specify that the rental property concerned must be a residential property located in the State.

Full details of the conditions that apply are set out in the relevant Tax and Duty Manual (Part 15-01-11A) available on the Revenue website at the following link:

www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-credit/index.aspx

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