Holly Cairns (Cork South West, Social Democrats)
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213. To ask the Minister for Finance if he will adjust the rent tax credit to enable a person renting a room from a relative to claim the credit; and if he will make a statement on the matter. [21238/23]

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 may be claimed in respect of qualifying rent paid in 2022 and subsequent years to end-2025.

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 can be claimed in circumstances 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.