Wednesday Club On Rent Tax Credit

Posted on | May 20, 2010 | No Comments

 

 In the Wednesday club this week we were talking about RENT TAX CREDIT.  Who can and cannot claim, how much we can claim (the rates of relief), what information do we need to claim this tax credit and what we should do if our landlord is a non-resident (not many of us do know) or we are renting from parents.  Rent is one of the most common areas for claiming tax refunds (or taxback) for PAYE taxpayers.

Can claim:
- If you are paying rent for a bedsit, apartment, flat or house to landlord or agency
 

Cannot claim:
- Rent paid to Local Authority or a State agency

- Rent paid under a lease agreement for 50 years or more

- Rent paid to a parent, where the parent does not declare this as rental income.

 

Rates of relief:
There is a maximum tax allowance you can claim for depends on if you are single, married or widowed and if you are under or over 55 years of age. So if you are single under 55 then you are entitled to a €400 (max. €2000×20%). Married or widowed person under 55 can claim €800 (max. €4000×20%). And if you are over 55 then you can claim double (single – €800, married, widowed – €1600). 

 

Paying rent to a non-resident Landlord?

If you pay directly to his/her account then you must deduct tax at the standard rate from gross amount that you pay.

Example: gross rent per month €1000
  deducted standard rate tax (€1000 x 20%) €200
  pay to landlord (€1000 – €200) €800

Then at the end of the year you must give completed form R 185 to the landlord to show that the tax has been accounted for the Revenue. Then the landlord can claim that as credit on their annual Tax Return. It is you (and not the landlord) who is liable for any tax which should have been deducted. If there is an agent who collects the rent on behalf of non-resident landlord then the rent is paid in gross and an agent is chargeable for tax on rents.

Renting from parents?

Since 2007 if you want to claim Taxback for Rent Tax Credit, the parents will not be allowed to claim the Rent a Room Relief. That means that the parent will need to declare their rental income on their annual Tax Return and pay Income Tax arising. (This is exemption to landlords who rent a room from their private residence and whose gross income does not exceed €10000 or €7620 in 2007)
Information needed for claiming  rent tax credit:
- Landlord’s name and address
- Gross amount of rent paid
- Date of tenancy
And always keep in your mind that you should keep proof for at least 6 years in case Revenue Commissioners ask to see them.

This weeks Wednesday Club was prepared and presented with thanks to Slavka.

More Information

See more information in our blog on Renting and Rent Tax Credits

You may also be interested in Service Charges Tax Credits

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