Tax advisers want answers on rent credit confusion

Tax advisers have called on the Government to clarify elements of the proposed rent credit in relation to third-level students.

Taxback.com says that several areas lack clarity even after the publication of the Finance Bill.

The Government announced a new €500 rent credit in the budget in recognition of the extraordinary strains in the private rented sector. The credit can be doubled to €1,000 in the event of couples renting together. It is scheduled to run for four years from this year.

The credit will normally be paid to the person renting. However, Minister for Finance Paschal Donohoe did clarify ahead of the Bill that parents would be able to claim the credit where they are paying rent for them to attend third-level education.

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But Taxback.com says the Bill is silent on whether a parent can claim rent credit on more than one tenancy where they have a number of college-going children living in different accommodation.

And there is also concern over the wording of the Bill which says that the student must have started their course before the age of 23.

“This suggests that parents will be unable to claim the credit for any children who delayed going to college and who therefore didn’t start until the age of 23 or older,” says Marian Ryan, consumer tax manager with Taxback.com. “It is also unclear if this age limit of 23 prevents parents of students who began a postgraduate or master’s degree at or after that age from claiming the relief.”

A further issue arises where the parents themselves are renting and in line to receive the credit for that accommodation. Taxback.com says it is unclear if people in this position will be able to claim credit for accommodation rented separately for their children at third-level colleges.

“The Government needs to clarify if the rent tax credit can be claimed twice in this instance – or if it is just restricted to the one property,” Ms Ryan said. “The Bill does state that only one rent credit can be claimed per person per year – which could mean that parents who currently rent their family home would lose out here.”

Mr Donohoe recently indicated that about 400,000 people are expected to be eligible for the credit – at a cost to the exchequer of €200 million a year.