It may have been announced back in 2023, but this is the first year that residential landlords can avail of a new tax relief. Aimed at keeping smaller landlords in the rental market, the incentive could be worth as much as €3,400 between now and 2027.
The catch? If you sell the property within four years, the relief will be claimed back.
There have already been issues with the new incentive, as efficient early filers of income tax returns discovered. The credit was being calculated incorrectly by Revenue, which meant that landlords were only benefiting from a deduction of €120 – instead of €600.
Separately, for some landlords who might be thinking of selling up, the credit is seen as being too little too late.
On the other side of the equation, of course, are hard-pressed tenants, who, according to latest figures from Daft, are now facing average monthly rents in excess of €2,000 for the first time. They might wish that any tax incentives offered go in their direction – even though Revenue figures suggest a large number have yet to claim rent tax relief to which they are already entitled.
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Here, we take a look at how the scheme for landlords will work, and just how much you should be entitled to back if you rent out a property.
Introducing the relief in Budget 2024, then Minister for Finance Michael McGrath said the Residential Premises Rental Income Relief, which allows landlords to reduce how much tax they must pay on rental income, was a “temporary” measure, primarily to benefit small landlords.
To qualify, you must fulfil certain conditions, such as being compliant with local property tax, and either have a tenancy registered with the Residential Tenancies Board or a local authority, or have the property marketed for rent.
“Effectively you’ll pay €600 less tax this year,” says tax adviser to landlords Brendan Allen of the relief.
The big red flag here is if you’re renting the property to a family member or relative, in which case Revenue says you can’t claim the relief.
Tech glitch
Some early birds got a bit of a shock earlier this year, when they filed their tax returns for 2024 only to discover Revenue was offering a much lower rate of benefit – 20 per cent of €600, which was just €120, rather than the full €600.
According to a spokeswoman for Revenue, this impacted about 2 per cent of the 51,000 returns (so about 1,000 landlords) who had filed between January 1st and March 24th. At this point, she says, the system was fixed.
The spokeswoman says that once the issue was identified, Revenue engaged with tax practitioner bodies and relevant third-party software providers to make them aware of the issue.
It has since commenced a review of all impacted returns, “and will correct any returns which require an amendment”.
She says taxpayers are also able to amend their self-assessment return themselves, if they wish, through ROS. It will then apply the updated calculations automatically in such cases.
That’s not the only glitch, however. Revenue has told tax advisers that a separate calculation issue is impacting cases of joint assessment, where ownership of the qualifying premises is shared. This resulted in the duplication of relief. It is expected that this will be fixed by June 21st. Again, Revenue says it will fix any returns which have been impacted.
How it works
The relief is offered at a rate of 20 per cent of the landlord’s rental income, up to a limit of €3,000 in 2024, €4,000 in 2025 and €5,000 for both 2026 and 2027.
This means that the most you can claim when you submit your Form 11 tax return for 2024 (deadline November 13th 2025 for online returns), is €600, rising to €800 next year, and €1,000 for 2026 and 2027. That amounts to total relief of €3,400 between now and the scheduled end of the scheme.
It applies to income tax only, so it will not reduce the amount of PRSI/USC that you owe.
If you’re self-assessed, you’ll find a new Residential Premises Rental Income Relief section on ROS, through which you can apply for the relief. Allen points out that you’ll find the relevant section at question 207 on page nine of your tax return.
Not every landlord might get the full rate of relief. According to Allen, if your rental profits are less than €3,000, the relief will be restricted to 20 per cent of the taxable profit. So if, for example, your profits are €2,000 for 2024, then you’ll only be able to claim relief of €400.
The relief is also offered on a per person basis, so if you have five properties that you let, you’ll still only be able to claim a maximum of €600 for 2024. Allen says some landlords feel they were “misled” by the Minister on this point, as many thought it was being offered on a per property basis.
In addition, if a property is jointly owned, the €600 can be divided between owners in proportion of their ownership.
“It’s quite restrictive in that sense,” says Allen, noting that tenants can avail of a rental tax credit of up to €1,000 a year – and where there is a couple, this can be worth as much as €2,000.
The relief on offer to landlords is some way short of this.
Clawback
And if, as a landlord, your plans change, you must be prepared to lose out on the incentive. According to Revenue, you’ll have to give back the relief if you sell the property within four years of the first year in which the relief is claimed – or if you transfer it to someone else.
Similarly, if there is a change of use in the property – for example, it’s not being rented out or marketed as such, or it is being used as a holiday home – then you could face a clawback.
And if you let it to a “connected person”, such as a family member, this can also trigger a clawback.
So should you wait until the end of the four-year period to claim the relief? Allen doesn’t think so, noting that many landlords are currently struggling with higher expenses and an inability to increase rents due to rent pressure zones.
“Interest rates have gone up but your income as a landlord is capped,” he says, adding, “I would envisage that most landlords would claim it in the year it might be allowed.”
Amid a background of smaller landlords leaving the rental market – Sherry FitzGerald said in April that about 30 per cent of their sellers during the first quarter of 2025 were landlords – the question is, will the new incentive keep a broader rental market in place?
“Any tax credits are very welcome, and we do need them but it won’t change anybody’s mind about whether you’re going to stay as a landlord or not,” says Allen. “Taxation is one matter but over-regulation and the ability of the Residential Tenancies Board (RTB) to deal with things is another.”
He suggests other steps that could be taken, such as allowing landlords’ rental income to be treated in the same way as any other trade. This would allow for a greater level of tax deductible expenses.
Another option could be to bring back a capital gains tax exemption for those keeping properties for a certain period of time, such as was introduced back in 2011.
And there is the issue of rent pressure zones, with the current regime due to end in December of this year. Allen would like such controls to come to an end.
“What I’d like to see is the zones ended. There will be a period of adjustment, but it will very quickly resolve the challenges of keeping properties in the rental market,” he says.
