A tax credit increase for renters is being introduced as part of a tax relief package to reduce the eviction ban’s fallout. In this article, we look at all the different tax breaks available.
New tax initiatives
There are a series of tax breaks; some are introduced, others being considered in the next budget meeting. The tax breaks being considered are:
Renters Tax Credit
The new rental credit was facilitated during the budget, allowing single tenants to claim €500 a year while couples can claim €1,000.
The scheme does not provide a cash rebate. Instead, it reduces tax by the relief amount.
The scheme has struggled to gain momentum, with only 154,000 renters out of 400,000 rental tenants making claims through the revenue service.
However, in a continued effort to help renters deal with the record high prices, the scheme will be extended and expanded in the next budget.
Capital Gains Reduction
Another idea gaining momentum in the hallowed halls of the Irish government is a reduction in capital gains tax applied when a rental property is sold to a tenant or approved housing body,
A tax break modelled on the rent-a-room scheme is targeted at providing tax relief to homeowners when renting a room to a tenant.
This tax break would be capped at €14,000.
Tax when providing short-term guest accommodation
If you decide to rent out your property on a short-term guest basis, then for tax purposes, this will not be categorised as rental income.
For more information on what tax is applicable for short-term lets, it’s best to speak directly to the revenue service.
A group of tax experts were asked what they thought about the tax breaks, and the consensus was that many tenants were being excluded as some landlords were circumventing the regulation. They believed there needed to be more effective means of enforcing the new regulations.
Eligibility criteria for tax breaks
Each tax break has its criteria, but one standard set in stone for all new tax incentives is that the tenancy must be registered with the RTB.
Purpose of the tax breaks
Tax breaks are issued for several different reasons. The main ones are to reduce the number of landlords leaving the sector, incentivise investors to become landlords and reduce/stabilise rental prices.
KPM Property Managers Ireland
If you need advice on the available tax breaks, KPM can help.
KPM Group has helped countless landlords free themselves from managing their portfolios and trust us to deliver the maximum return on investment while providing quality property management services.
If you would like to speak to us here at KPM about your portfolio, then get in touch today, and a staff member will be happy to help in any way we can.