Revenue Note for Guidance

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Revenue Note for Guidance

790F Exemption from income tax of rental income subject to registration with Residential Tenancies Board

Summary

Occupational pension schemes, Retirement Annuity Contracts (RACs), Personal Retirement Savings Accounts (PRSAs), Pan-European Personal Pension Products (PEPPs) and Approved Retirement Funds (ARFs) may acquire a property as an investment. Such properties benefit from an exemption from tax on any rental income remitted into that pension fund and on any gain made on the disposal of the property, as long as it satisfies certain conditions.

This section provides that, from 1 January 2024, occupational pension schemes, RACs, PRSAs, PEPPs and ARFs which are in receipt of rents from a qualifying lease of a residential property will be allowed an exemption from income tax or from capital gains tax on the basis that the person chargeable has registered the tenancy with the Residential Tenancies Board (RTB).

Details

(1) The section contains a number of definitions including:

‘Act of 2004’ means the Residential Tenancies Act 2004;

‘lease’ means any lease or tenancy agreement in respect of—

  1. a residential premises required to be registered under Part 7 of the Act of 2004 by the person chargeable, or
  2. a dwelling referred to in section 3(2) of the Act of 2004;
    ‘person chargeable’, in respect of the rental income or the profits or gains arising from any rent in respect of a residential property, means –
    1. in the case of an exempt approved scheme, the trustees of the scheme,
    2. in the case of a RAC, the persons by and to whom premiums are payable under any contract for the time being approved under section 784,
    3. in the case of an RAC established under trust, the trustees or other persons having the management of any trust scheme so approved,
    4. in the case of an approved retirement fund, the qualifying fund manager acting on behalf of the person beneficially entitled to the assets of the approved retirement fund,
    5. in the case of a PRSA, the PRSA administrator, or
    6. in the case of a PEPP, a PEPP provider;

    ‘qualifying lease’ means a lease granted by the person chargeable to a tenant residing in a residential property.

(2) The section applies with effect from 1 January 2024, where a person chargeable is allowed an exemption from income tax under the provisions of sections 774(3) (occupational pension schemes), 784(4) (RACs), 784A(2) (ARFs), 787I(1) (PRSAs) or 787AC(1) (PEPPs) TCA in relation to rents received from a qualifying lease, or an exemption from capital gains tax under section 784A(2) TCA, that exemption shall not apply unless the person chargeable has registered the tenancy with the RTB.

(3) Where subsection (2) applies;

  1. Revenue may request by written notice that the person chargeable provide, within 30 days of such notice, evidence that the qualifying lease has been registered with the RTB, under the provisions of Part 7 of the Residential Tenancies Act 2004, and
  2. a copy of an entry in respect of the published register provided under section 132 of the 2004 Act, by the person chargeable, will be accepted by Revenue as evidence of this registration.

Relevant Date: Finance Act 2024