Detailed below is information on your entitlements to claim Rent Relief for 2011.
Remember, you can go back 4 years and to receive unclaimed rent relief which could be up to €1,600 per year.
Note rent relief is being phased out so contact our office today to see if you are entitled to a tax refund.
email us at jason@mcdowellaccountants.ie or Telephone 071 91 47580 or simply drop into our offices at 14 Quay St Sligo.
If you live in private rented accommodation in Ireland and pay income tax, you may be eligible for tax relief on part of your rent. Relief is also allowable on rent paid for premises outside the State.
Budget 2011
Budget 2011 changed the rules on rent relief for tenants of private rented housing:
- The relief will be phased out over 8 years
- Claimants who were not renting at 7 December 2010 and who subsequently entered into a rental agreement will not be able to claim relief
Details of these changes are in Revenue’s Budget 2011 leaflet.
Rules
In order to claim tax relief, you must be paying rent for private rented accommodation which is used as your sole or main residence. This includes accommodation such as a bedsit, flat, apartment or house.
You cannot claim tax relief for rent paid as follows:
- To a local authority or a State agency
- Rent paid under a lease agreement for 50 years or more.
Landlords or agents living in Ireland
If your landlord or agent is resident in Ireland, a receipt for rent you have paid must be provided if and when it is requested by the Revenue Commissioners. This rule applies regardless of whether you pay your rent directly to the landlord or to an agent on behalf of the landlord. Each receipt must show the following:
- Landlord’s name, PPS Number and address
- Amount of rent that you have paid
- Period of time covered by the receipt.
You should keep your receipts for at least 6 years in case the Revenue Commissioners ask to see them.
Landlords living outside Ireland
If your landlord lives outside Ireland and you pay rent directly to them or to their bank account located in Ireland or abroad, you must deduct tax at the standard rate (20% in 2011) from the gross amount that you pay. This deduction is not your tax relief – it is tax payable to Revenue from your landlord’s income.
For example, say your landlord lives in Germany and you pay him/her gross rent per month of €1,000. Firstly, calculate the amount of tax to be deducted (€1,000 x 20% = €200). Now deduct the tax due from the gross rent you pay (€1,000 – €200 = €800 ). The net rent to be paid to your landlord is €800 per month. The amount due to Revenue is the €200 per month that you deducted from the gross rent of €1,000.
Accounting to Revenue for tax deducted from rent
You must account to Revenue for the tax you deduct from the gross rent. If you fail to deduct tax from rent you pay to a landlord living outside Ireland, this will mean that you (and not the landlord) will be liable for any tax which should have been deducted.
If you pay tax under PAYE, you can account for it by reducing your tax credits and Standard Rate Cut-Off Point. You can notify your local Revenue Office and ask them to arrange this. Alternatively, you can make a tax return – Form 12 (pdf) and pay the retained amount to Revenue.
If you pay tax under self-assessment, you should include the details of your rent on your annual return – Form 11 (pdf). A notice of assessment will then issue to you, showing the reduced credit.
At the end of the year you must give your landlord a completed Certificate of Income Tax Deducted – Form R185 (pdf).
Rates
Tax relief on private rented accommodation is available at the standard rate of 20% whether your landlord lives in Ireland or abroad. The maximum amounts of relief on rent are as follows:
| Personal circumstances | Tax year 2010 | Tax year 2011 |
| Single and aged under 55 years | €2,000 | €1,600 |
| Single and aged over 55 years | €4,000 | €3,200 |
| Married and aged under 55 years | €4,000 | €3,200 |
| Married and aged over 55 years | €8,000 | €6,400 |
To calculate what this is worth to you each year after tax, you multiply the tax allowance amounts above by 20%. So, for those aged:
- Under 55: the maximum amount a single person under 55 can get is €320 (€1,600 x 20%) for rent paid in 2011. The maximum amount a married couple or widowed person can get is €640 (€3,200 x 20%) for rent paid in 2011.
- Over 55: the maximum amount a single person over 55 can get is €640 (€3,200 x 20%) for rent paid in 2011. The maximum amount a married couple or widowed person can get is €1,280 (€6,400 x 20%) for rent paid in 2011.