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Tax issues for tenants

Introduction

There are two main tax issues for tenants in private rented accommodation.

The first is that you may be eligible for tax relief on part of your rent – see ‘Tax relief’ below.

The second is that, if you pay rent directly to a landlord who lives abroad, you must deduct tax from the rent and account for it to the Revenue Commissioners – see ‘Landlords living abroad’ below.

Tax relief

If you are renting accommodation privately (whether in Ireland or outside the State) and pay income tax, you may be eligible for tax relief on part of your rent. You can only claim this relief if you were already renting at 7 December 2010. If you were not renting on that date and you subsequently entered into a rental agreement, you will not be able to claim tax relief on your rent. However, if you were renting at 7 December 2010 you will continue to qualify for this relief even if you enter a different rental agreement after that date. The relief is being phased out and 2017 will be its last year.

Only the rent for private rented accommodation that you use as your sole or main residence will qualify for tax relief. This includes bedsits, flats, apartments and houses.

You cannot claim tax relief for rent paid to a local authority or a State agency, or for rent paid under a lease agreement for 50 years or more.

Receipts

You must provide receipts for rent you have paid if the Revenue Commissioners request them. 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.

See ‘Rates’ below for the maximum amounts of relief for your own situation.

Rates

Tax relief on private rented accommodation is calculated at the standard rate of 20%. The maximum amounts on which you can claim relief are as follows:

Personal circumstances For tax year 2013 For tax year 2014
Single and aged under 55 years €1,000 €800
Single and aged over 55 years €2,000 €1,600
Married/widowed/in a civil partnership/surviving civil partner and aged under 55 years €2,000 €1,600
Married/widowed/in a civil partnership/surviving civil partner and aged over 55 years €4,000 €3,200

To work out 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 that a single person under 55 can get is €200 (€1,000 x 20%) for rent paid in 2013. This will reduce to €160 (€800 x 20%) for rent paid in 2014.

    The maximum amount that you can get if you are married, widowed, in a civil partnership or a surviving civil partner is €400 (€2,000 x 20%) for rent paid in 2013. This will reduce to €320 (€1,600 x 20%) for rent paid in 2014.

  • Over 55: the maximum amount that a single person over 55 can get is €400 (€2,000 x 20%) for rent paid in 2013. This will reduce to €320 (€1,600 x 20%) for rent paid in 2014.

    The maximum amount that you can get if you are married, widowed, in a civil partnership or a surviving civil partner is €800 (€4,000 x 20%) for rent paid in 2013. This will reduce to €640 (€3,200 x 20%) for rent paid in 2014.

As mentioned above, rent relief is being phased out. Revenue's Budget Summary 2013 (pdf) shows the amount of rent that will attract tax relief in each year up to 2017.

How to apply

To claim rent relief you can complete Form Rent 1 (pdf) and send it to your tax office. (Copies of the form are also available from your local tax office.) If you have any difficulty completing the form or supplying any of the information requested, staff in the tax office will be happy to help you.

Alternatively, you can claim the tax relief using Revenue's PAYE anytime service.

As with all tax reliefs, you must claim within 4 years of the end of the year to which it refers, or you will not get the relief.

Landlords living abroad

If your landlord lives outside Ireland and you pay your rent through an agent, you do not have to deduct tax from the rent. The landlord’s collection agent must account for the tax in an annual tax return.

However, if you pay the rent directly to the landlord (including into their bank account) whether in Ireland or abroad, you must deduct tax at the standard rate (20% in 2013) 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, your landlord lives in Germany and you pay him/her gross rent per month of €1,000. First, work out 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 that you deduct from the gross rent. If you fail to deduct tax from rent that you pay directly to a landlord living outside Ireland, this will mean that you (and not the landlord) will be liable for any tax that 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).

Where to apply

Contact information for tax offices is available here and in all telephone directories.

Page updated: 29 October 2013

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If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.