Revenue Note for Guidance

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Revenue Note for Guidance

473B Rent Tax Credit

Summary

This section provides for an income tax credit which is available to those who pay rent for their residential accommodation. This credit applies for the 2022 to 2025 years of assessment, inclusive. For the years of assessment 2024 and 2025, the value of the tax credit is equal to the lesser of 20 per cent of the qualifying payment made or €1,000 (€2,000 in the case of a jointly assessed couple).

Qualifying payments in respect of rent due for a claimant’s principal private residence or ‘second home’ used to facilitate an individual’s attendance at or participation in their employment, office holding, trade, profession or approved course, or for a property used by a claimant’s child to facilitate his or her attendance at or participation in an approved course will, subject to satisfying the required conditions, qualify for the credit. The credit will be given on foot a claim being made to Revenue by the claimant.

Details

Definitions

(1) “appropriate percentage”, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;

“approved course” has the same meaning as it has in section 473A;

“child” means a child of an individual, or a child of the individual’s spouse or civil partner, who has not attained the age of 23 years at the commencement of the year of assessment during which he or she first enters an approved course;

“claimant” has the meaning given to it in subsection (2);

“landlord”, in relation to a residential property, means the person for the time being entitled to receive (otherwise than as agent for another person) any payment on account of rent paid under a tenancy in respect of the residential property;

“payment on account of rent” means a payment made in return for the special possession, use, occupation or enjoyment of a residential property, but does not include -

  1. any portion of such payment which has been, or is to be, reimbursed, or otherwise funded by way of a subsidy provided —
    1. to the claimant, or
    2. where the claimant is assessed to tax in accordance with section 1017 or 1031C in the year of assessment, to his or her spouse or civil partner,
    or
  2. any itemised payment relating to-
    1. the cost of maintenance of, or repairs to, the property,
    2. the provision of goods or services relating to any right or benefit other than the bare right to special possession, use, occupation or enjoyment of the property, or
    3. a security deposit paid on commencement of the tenancy;

“PPS Number”, in relation to an individual, means the individual’s Personal Public Service Number within the meaning of section 262 of the Social Welfare Consolidation Act 2005;

“principal private residence” means a residential property occupied by an individual as his or her sole residence;

“qualifying payment” means a payment made on account of rent falling due in a year of assessment, where such payment has been made under a tenancy;

“relative” means a lineal ascendent, lineal descendent, brother, sister, uncle, aunt, niece or nephew;

“rent tax credit” has the meaning given to it in subsection (2);

“residential property” means-

  1. a building or part of a building located in the State which is used or suitable for use as a dwelling, and
  2. adjoining land which the occupier of a building or part of a building has for his or her own occupation and enjoyment with the building or part of a building as its gardens or grounds of an ornamental nature;

“specified amount”, in relation to a year of assessment, means-

  1. €10,000, in the case of an individual who is assessed to tax in accordance with section 1017 or 1031C in the year of assessment, and
  2. €5,000 in all other cases;

“specified landlord” means-

  1. a Minister of the Government,
  2. the Commissioners of Public Works in Ireland,
  3. a housing authority within the meaning of the Housing (Miscellaneous Provisions) Act 1992, or
  4. an approved housing body within the meaning of the Housing (Regulation of Approved Housing Bodies) Act 2019;

“supported tenant” means, in relation to a tenancy, an individual who is -

  1. in receipt of-
    1. payment of a supplement towards the amount of rent payable by the individual in respect of his or her residence payable in accordance with regulations made under section 198 of the Social Welfare Consolidation Act 2005,
    2. housing assistance, within the meaning of Part 4 of the Housing (Miscellaneous Provisions) Act 2014, or
    3. social housing support, within the meaning of the Housing (Miscellaneous Provisions) Act 2009,
    or
  2. residing in a residential property which has been designated as a cost rental dwelling within the meaning of Part 3 of the Affordable Housing Act 2021;

“tax reference number” means-

  1. in the case of an individual, his or her PPS Number and,
  2. in the case of a partnership or company, the reference number stated on any return of income, form or notice of assessment issued to the partnership or company, as the case may be, by the Revenue Commissioners;

“tenancy” means-

  1. any agreement, contract or lease which has been registered under Part 7 of the Residential Tenancies Act 2004, or
  2. any licence for the use, as a residence, of a room or rooms in an individual’s principal private residence, where-
    1. there is no obligation under Part 7 of the Residential Tenancies Act 2004 for such licence to be registered, and
    2. the licence has been commenced with the consent of the landlord,

    but does not include any tenancy-
  1. which, apart from any statutory extension, is a tenancy for a freehold estate or interest or for a definite period of 50 years or more, or
  2. in which an agreement or provision exists under which any amount paid may be treated as consideration or part consideration, in whatever form, for the creation of a further or greater estate, tenancy or interest in the property concerned or any other property.

Entitlement to the credit

(2) The rent tax credit will be available where an individual (to be known as the claimant):

  1. proves that he or she made a qualifying payment during the year of assessment,
  2. that qualifying payment was made in respect of a residential property which was used by the claimant as his or her principal private residence during the period to which the payment relates, and
  3. makes a claim in that regard.

The value of the credit will be the lower of:

  1. the qualifying payment made during the year of assessment at the standard rate of tax (currently 20%),
  2. the specified amount (being €10,000 in the case of a jointly assessed individual, and €5,000 in all other cases) at the standard rate of tax (currently 20%), and
  3. the amount which reduces the claimant’s income tax to nil.

Therefore, the maximum credit due to an individual in respect of a year of assessment will be €1,000, or €2,000 in the case of a jointly assessed couple for 2024 and 2025.

Apportionment

(3)(a) Where a qualifying payment relates to a period which straddles two years of assessment the payment will be apportioned based on the proportion each part of the period has to the period as a whole.

(3)(b) Where a qualifying payment has been apportioned to a year of assessment, that portion of the payment shall be deemed to have been made in that year of assessment.

Jointly assessed couples

(4) In the case of a couple who are jointly assessed to tax, any qualifying payment made by the non-assessable party will be deemed to have been made by the assessable party (the claimant).

Payments made in respect of residential property that is not the claimant’s PPR

(5) The credit may also be available where a claimant proves that he or she has made a qualifying payment in respect of a residential property which he or she uses, but which is not his or her principal private residence.

In such cases, the claimant will be entitled to the rent tax credit in respect of that qualifying payment where he or she:

  1. makes a claim in that regard, and
  2. uses that residential property to facilitate his or her attendance at or participation in their trade, profession, employment, office holding or an approved course.

This provision also applies where the claimant is jointly assessed to tax and either the qualifying payment is made by his or her spouse or civil partner, or the residential property in respect of which the qualifying payment was made was used by his or her spouse or civil partner.

Exclusions

(6)(a) There are a number of exclusions from the credit, namely:

  1. where the landlord is a specified landlord as defined in subsection (1), or
  2. the claimant is a supported tenant as defined in subsection (1), or
  3. (6)(b) where the claimant is a relative of the landlord (being an ancestral ascendent or descendent, sibling, uncle, aunt, niece or nephew).

The exclusion under subsection (6)(b) applies subject to subsection (7).

Where a payment is received in respect of that property to which section 836 TCA (Allowances for expenses for members of the Oireachtas).

Related claimant and landlord exemption

(7)(a)-(c) Notwithstanding subsection (6)(b) the credit can be claimed in certain circumstances where the claimant and landlord are related. This will be the case where:

  1. the relationship between the claimant and landlord is not that of parent and child, or vice versa, and
  2. the tenancy is of a type that is required to be registered with the Residential Tenancy Board and complies with such requirement.

Rent payment made in respect of property use by the claimant’s child

(8) The credit may also be available where a claimant proves that he or she has made a qualifying payment in respect of a residential property which is used by his or her child as their principal private residence. In such cases, the claimant would be entitled to the rent tax credit in respect of that qualifying payment where:

  1. he or she makes a claim in that regard,
  2. neither the parent nor the child are related to the landlord,
  3. the child is participating in an approved course and using the residential property to facilitate his or her attendance at same, and
  4. if the tenancy is of a type that is required to be registered with the Residential Tenancy Board that requirement is complied with.

This provision also applies where the claimant is jointly assessed to tax and either the qualifying payment is made by his or her spouse or civil partner, or the child concerned is a child of his or her spouse or civil partner.

A child for this purpose means an individual who has not attained the age of 23 at the commencement of the year of assessment during which he or she first enters an approved course.

Making a claim

(9) Revenue will make an electronic process available to facilitate claims for the rent tax credit and claimants may be required to provide the following information when making a claim for the rent tax credit:

  1. the name, address (including the Eircode) and PPS Number of the claimant and his or her spouse or civil partner, where the couple are jointly assessed and that spouse or civil partner made the qualifying payment;
  2. details of the total amount paid to the landlord by the claimant (or his or her spouse or civil partner where the couple are jointly assessed and the payment was made by the claimant’s spouse or civil partner) including a periodic breakdown of the payment and a split between those amounts which are and are not qualifying payments for the purpose of this tax credit;
  3. full particulars of the tenancy under which the qualifying payment was made, including:
    • the name and address (including the Eircode) of the individual who uses the residential property, if not the claimant (or his or her spouse or civil partner if jointly assessed),
    • the address (including the Eircode) of the residential property in respect of which the qualifying payment was made,
    • the unique identification number assigned to the residential property for Local Property Tax (LPT) purposes (where it is available to the claimant),
    • the unique number assigned to the tenancy by the Residential Tenancy Board (RTB) once the tenancy has been registered (if applicable and where it is available to the claimant),
    • the duration of the tenancy, and
    • where the tenancy is a licence, confirmation that the landlord has consented to the commencement of the licence;
  4. the name and address (including the Eircode) of the person to whom the qualifying payment was made and the landlord (if a different person, and where such information is available to the claimant); and
  5. the tax reference number of the landlord (where it is available to the claimant).

Furnishing of information

(10)(a) Revenue have the power to request additional information or documentation from a claimant in support of his or her claim for the rent tax credit.

Revenue can require the claimant to provide, within 30 days, a copy of the relevant tenancy document, a receipt or statement of any payment made under that tenancy or any other information that may reasonably be required by the Revenue Commissioners to determine whether the requirements of this provision are met.

(10)(b) The requested particular must be in writing and can contain the following:

  1. the name of the individual who made the qualifying payment;
  2. the amount of any payment made under a tenancy to the landlord concerned, or to a person acting on behalf of the landlord, by that individual during the relevant year of assessment;
  3. the total amount of the payment period made to the landlord;
  4. the amount of any qualifying payment made to the landlord;
  5. the total amount of any qualifying payment made to the landlord;
  6. the name and address (including the Eircode) of the individual who uses the property as his or her principal private residence, if different to the individual who made the qualifying payment
  7. the address, including Eircode of the property;
  8. the name and address (including the Eircode) of the person to whom the qualifying payment was made;
  9. the name and address (including the Eircode) of the landlord, if different to the person referred to in subparagraph (viii); and
  10. the tax reference number of the landlord.

(11) Revenue have grounds to refuse a claim or to withdraw the credit if the claimant fails to furnish any of the information or documentation requested under subsection (10).

(12) A person in receipt of a qualifying payment (generally landlord or landlord’s agent) must, within 30 days of being requested to do so, provide Revenue with any information the officer considers necessary to determine whether the requirements of this section are met.

Credit available

(13) Where a claimant is entitled to the rent tax credit on a number of basis, the maximum credit available is €1,00 for a single individual, and €2,000 per year for an individual who is jointly assessed to tax for the years 2024 and 2025.

Years applicable

(14) The rent tax credit shall be available in respect of the years of assessment 2022 – 2025 inclusive.

Relevant Date: Finance Act 2024