Brendan Howlin (Wexford, Labour)
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327. To ask the Minister for Finance if he will review the application of the rental tax credit, to ensure that the children of a property owner who are registered tenants in the property with the RTB paying a market rent, can avail of this credit on the same basis as any other renter; and if he will make a statement on the matter. [13140/23]

Michael 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 they use as their principal private residence;

2. where the claimant makes a qualifying payment in respect of a residential property which they use to facilitate their attendance at or participation in their 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 their child uses to facilitate their 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.

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.

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