Only half of eligible renters claim €500 a year tax credit, figures show

Only half of renters entitled to claim tax back on their monthly outlay are actually doing so, new figures indicate.

A tax credit scheme for renters has seen 289,971 claims since it was announced in last year’s budget, with the total amount claimed being €165.45 million, according to the Department of Finance.

The figures indicate that around half of the number of people estimated to be entitled to claim the €500 a year rent tax credit did so last year. The data available to date only covers PAYE taxpayers, but they are the largest taxpayer group among renters.

Rent Tax Credit claims are made on a ‘taxpayer unit’ basis, with a taxpayer unit being either an individual who is singly assessed or a couple who have elected for joint assessment.

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The credit was available for all of 2022 and the relief is to run from 2022 to 2025 inclusive. The Department of Finance has estimated the credit might be of benefit to approximately 400,000 taxpayers.

The figures show 203,000 taxpayer units claimed the credit for 2022, 35,444 taxpayer units have made claims for 2022 and 2023, and 16,083 taxpayer units have made claims for 2023 only. The total amount claimed for last year was €33.59 million and total amount claimed to date for 2023 is €31.86 million.

Last month the Minister for Higher Education, Simon Harris, said he would like to see the maximum for an individual under the scheme doubled to €1,000 a year in the upcoming budget.

The credit, introduced in Budget 2023, is worth a maximum of €500 a year per individual or €1,000 per jointly assessed couple. Those eligible include people paying for private rented accommodation or a parent who pays rent on behalf of a university-going child.

Mr Harris said that as well as seeing the credit doubled, he would like to see the criteria “tweaked” to address an anomaly whereby parents can avail of the scheme if their child is living in campus student accommodation but only the student can if he or she is living in rent-a-room or digs-type accommodation. Yet some students may not have sufficient income for the tax credit to be of benefit to them.

“The operation of the Rent Tax Credit is closely monitored by the department in conjunction with Revenue and the question of whether any further adjustments are required is for consideration in the context of the Budget and Finance Bill process,” a spokeswoman for the Department said.

Claims by PAYE taxpayers for 2022 can be made by submitting an income tax return for that year while for claims relating to 2023 taxpayers have the option of claiming the credit as rent is incurred or at the end of the year through their income tax return. Data on claims by self-assessed taxpayers is not yet available as their returns are generally submitted later in the year. The statutory filing date for the 2022 tax return for self-assessed taxpayers is October 31st next.

Census data from 2021 shows that employee income is the primary source of income for more than 70 per cent of tenants, social welfare for twenty per cent, and self-employed income for only 3.2 per cent. The rent credit scheme is not open to Housing Assistance Payment (Hap) tenants.

Earlier this year a survey by Taxpayer.com found that more than seven out of ten tenants had yet to claim the credit, with respondents to the survey citing issues with landlords as among the reasons for their not doing so.

Among the issues cited was the fact that they paid their rent in cash, or felt “uncomfortable” about asking their landlords for the information necessary to file their claim. Others cited the process of filing a tax return as being too cumbersome. Landlords not registered with the Residential Tenancies Board was another issue cited.

Mary Conway, chair of the Irish Property Owners Association, said she was a landlord and a letting agent and had notified all her tenants of the scheme when it was announced but did not know how many had gone on to file tax returns and claim the credit. “Anything that we can do to help tenants we are happy to do.”

However, she said, there was a lot of illegal letting going on, citing one recent case she had knowledge of where a rented house was let by a new tenant to a third party, who then put in partitioned walls and let rooms to a large number of foreign students. The official tenant had said to her that he was operating a number of properties in Dublin in this way and suggested they work together. She declined.

“Landlords get a lot of flak for stuff that they don’t know is going on,” she said. “There is a huge amount of unregulated activity, a lot of fly-by-nights out there doing a lot of really hairy stuff.”