Paul Kehoe (Wexford, Fine Gael)
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329. To ask the Minister for Finance the reason a person who is renting a room in a house owned by their parent which is not the principal residence of the parent, at market rent and registered with the RTB, cannot claim the rental tax credit; and if he will make a statement on the matter. [13319/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The Rent Tax Credit, as provided for in section 473B of the Taxes Consolidation Act 1997 (TCA 1997), was introduced by Finance Act 2022 and will be available in respect of qualifying payments made during the 2022 to 2025 years of assessment inclusive.

The credit may be claimed, subject to a number of conditions, broadly 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.

In designing tax measures, there is a balance to be struck between providing support to as many people as possible consistent with the overall policy intention behind the measure and ensuring that there is an appropriate degree of control in the management of limited Exchequer resources. The current rules for the Rent Tax Credit seek to achieve such a balance.

Further details in respect of the credit, including comprehensive guidance on the full range of conditions which must be met and how to make a claim, can be found in Tax and Duty Manual Part 15-01-11A at:

www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-11A.pdf.

Finally, 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.