BY JOHN ELLIS, FINANCIAL ADVISOR
Nine months on, half of eligible individuals have yet to apply for the Government’s rent credit tax relief scheme. New figures recently obtained by RTÉ News reveal that, out of 400,000 eligible people, only 230,000 have requested support, raising concerns about the effectiveness of the scheme.
The scheme, introduced in the 2023 Budget, offers eligible single renters €500 annually and couples €1,000 in tax relief. The credit reduces the amount of Income Tax payable for a tax year, with relief granted at a rate of 20%. This is also available to parents or guardians paying accommodation costs for a student living away from home who can also receive financial support.
To benefit from the Rent Tax Credit, you must have an Income Tax liability to offset against it, but the credit does not provide relief against the Universal Social Charge (USC) or Pay Related Social Insurance (PRSI). If the credit exceeds the Income Tax liability, a partial refund is given equal to the total Income Tax liability for the year.
Why the low uptake? When the scheme was announced in the Budget, Threshold, the housing charity, said that “tax relief for renters, in budget 2023, is worth just seven days of rent in Dublin” and that the Government was not doing enough to publicise the available supports. Other critics highlight that the requirement for landlords to be registered with the Residential Tenancies Board (RTB) is limiting access to the fund.
The RTB is the public body set up to support and develop a well-functioning rental housing sector. Their remit extends to the private rental, Approved Housing Body (AHB) and Student Specific Accommodation sectors. All private residential landlords, Approved Housing Bodies (who are not-for-profit housing providers, often referred to as Housing Associations) and landlords of Student Specific Accommodation must register their tenancies with the RTB.
The RTB’s role is to regulate the rental sector, provide information and research to inform policy, maintain a national register of tenancies, resolve disputes between tenants and landlords, initiate an investigation into conduct by a landlord, and provide information to the public to ensure tenancies run smoothly and no issues arise. Hence, the hesitancy of some renters to approach their landlords due to concerns about their ‘home’ being an unregistered tenancy or belonging to a non-compliant landlord.
Marian Ryan, Director of Business Development with Taxback.com, echoes these sentiments, stating that many renters have encountered obstacles when attempting to claim the tax credit. She cites the requirement for landlords to be registered with the Residential Tenancies Board as a significant barrier. Some landlords may be reluctant to register, while others fear rent increases if their tenants inquire about registration. Still, she encourages eligible taxpayers to consider applying for the valuable tax credit.
The conditions for claiming the Rent Tax Credit are outlined on the Revenue website. The link is on the front page of Revenue.ie. Formal claims must be made by completing the Income Tax return for the relevant tax year.
To be successful rental payments must have been made under a tenancy agreement with the landlord’s consent. The RTB registration requirement may apply, except for ‘rent-a-room’ or ‘digs’ arrangements and payments made by parents on behalf of their children. Furthermore, the rental property in question must be a residential property located in Ireland.
But individuals receiving State housing support, such as HAP, Rent Supplement, or RAS, are not eligible for the Rent Tax Credit and landlords who are Housing Associations or Approved Housing Bodies are also excluded.
Revenue advises claimants to provide comprehensive information about their rental arrangements, including the RTB number if applicable. The RTB website offers guidance on obtaining the number. Failure to provide the RTB number when requested by Revenue may result in the withdrawal of the credit. You will also have to supply the address of the rented property, including the eircode, the landlord’s name, address, and PPS number, as well as confirmation of registration with the RTB.
To claim for the tax credit in 2022, PAYE taxpayers can complete their Income Tax Return online in myAccount.ie, while self-assessed individuals can claim through the annual Income Tax Return (Form 11) in Revenue Online Service (ROS).
For the tax year 2023, PAYE taxpayers can claim in real-time, again, through myAccount.ie or wait to claim when completing their Income Tax Return for 2023 next year. The scheme currently accepts requests for 2022 and 2023, with plans for continuation until 2025.
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