The Department of Finance publishes the first Review of the Rent Tax Credit
- Foilsithe:
- An t-eolas is déanaí:
The Review shows findings from the first years of the Credit, 2022 and 2023, and draws initial conclusions regarding its appropriateness and value for money through the analysis of available administrative data. In doing so, it also considers the rental market context and rationale for the Rent Tax Credit, including an assessment of the distributional impact of the Tax Credit.
The Rent Tax Credit was introduced in Finance Act 2022 at a rate of €500 for singly assessed taxpayers and €1,000 for jointly assessed units (retrospective for 2022 claims) and was available to those who rent their principal private residence, and in certain other circumstances. It was subsequently amended in Finance Act 2023, by increasing the credit from €500 to €750 for single persons and from €1,000 to €1,500 for a jointly assessed couple. Finally, in its current version as per the Finance Act 2024, the tax credit was further increased to €1,000 for single taxpayers and to €2,000 for jointly assessed couples, applying to claims for 2025 and – retrospectively – for 2024 as well.
Latest available data from Revenue shows that taxpayer units benefitting from the Tax Credit were 273,000 in 2022 and 315,000 in 2023, costing €156 million in 2022 and €183 million in 2023. More detailed information is available for the first year and shows that that 372,000 people claimed the Rent Tax Credit in 2022.
Some of the main findings from the Review include:
- In 2022, individuals claiming the Rent Tax Credit were more than 90 per cent of the initially estimate of 400,000 beneficiaries made at the time of its introduction.
- The most represented cohorts among RTC claimants are young adults between 21 and 40 years old, residents in Dublin, and single persons.
- The lack of targeted beneficiaries and the significant exchequer cost raise concerns about the suitability of the Rent Tax Credit as tax expenditure rather than a direct expenditure.
- More detailed data availability would provide a significant improvement to future evaluations of the Rent Tax Credit.
Commenting on the publication, Minister for Finance, Paschal Donohoe T.D. stated:
“I welcome the publication of the first Review of the Rent Tax Credit.
The Rent Tax Credit was introduced at a time of rising living costs, house prices and rents to assist renters, reflecting the Government’s intent to address affordability for private tenants.
This Review provides for a timely opportunity to assess the impact and the continued relevance of the Rent Tax Credit.”
ENDS