Rent Relief

davidfinglas

Hi people,

Im sure this has probably been posted 3948234623 times before but i was hoping somebody might have been through the process and could helpme out...

Basically I sent off the rent relief form about a month ago. I put down that i pay 375PM since 06. I live at home with my mother only.

Three weeks after sending it i hear nothing back so i called them about it. The guy on the phone said 'yeah everythings fine, its due to be processed today and we'll put the credit in your account'

Heard nothin more so i called them again on monday. they told me that they'd sent out a letter which i just got today. After reading it, it says that my ma is liable for tax on any rent i claim?! I've also heard that the most you can get back for a year is 400.

So if i go ahead with the claim, i get 400 per year, but she'll get taxed even more than that?! This cant be right! Ive a feelin theyre just trying to deter people, but i just want to know if anyone went through with it, and if yous think its worth my while going ahead with it???

Also, i rang them beforei even sent off them form, just to get a heads up. The chap on the phone was sound, and he was saying she wouldnt pay tax on it unless it was over 10k!! I dont know what to believe but i dont want to leave me ma hung out to dry over it!!

Any advice is much appreaciated, cheers!!

Kristopherus

From the Revenue Website: "Rent relief can be claimed where a child is required to pay rent to their parents. The amounts paid however must be Rent as the term would normally be understood and not merely a contribution towards the upkeep of the household. Since 2007 where the Rent Tax Credit is claimed by a child paying rent to their parents, the parents will not be allowed to claim the Rent a Room exemption (this is an exemption allowed to landlords who Rent a Room out of their Principal Private Residence and whose Gross Rental Income from this does not exceed €10,000 in 2010). This means that the parent will need to declare their rental income on their annual Tax Return and pay any Income Tax arising."

Note this allowance was cancelled in the last Budget.

davidfinglas

So in a nutshell, does that mean if i claim rent relief the only winner is revenue?

barneystinson

davidfinglas wrote: »

So in a nutshell, does that mean if i claim rent relief the only winner is revenue?

Correct.

And then the next question is: Seeing as you've said you've paid 375p.m. and signed a claim to that effect, will they go after your mother for the income tax...

davidfinglas

barneystinson wrote: »

Correct.

And then the next question is: Seeing as you've said you've paid 375p.m. and signed a claim to that effect, will they go after your mother for the income tax...

Well then theyre arent really relieveing anything! How pointless!!

as for the second part, i can answer that one: they cant go after my mother considering they sent me a letter requesting a breakdown of what the 375pm is for...i could always say 375 is for electric/food/heating etc..

Derfil

Is the first 10,000 she earns not tax free?

Kristopherus

davidfinglas wrote: »

Well then theyre arent really relieveing anything! How pointless!!

as for the second part, i can answer that one: they cant go after my mother considering they sent me a letter requesting a breakdown of what the 375pm is for...i could always say 375 is for electric/food/heating etc..

But if you go down that road, they will consider that spending as general household spending, which is not allowable. Also bear in mind that if your mum is a pensioner or in receipt of any welfare payment, then that income will be added to the rental income for taxation purposes. If she is employed and in the lower rate of income tax, then the rental income could very well bring her into the higher rate of tax. A rock and a hard place comes to mind ................

barneystinson

davidfinglas wrote: »

Well then theyre arent really relieveing anything! How pointless!!

as for the second part, i can answer that one: they cant go after my mother considering they sent me a letter requesting a breakdown of what the 375pm is for...i could always say 375 is for electric/food/heating etc..

Of course they are relieving something, to you. You still get the benefit of the rent tax credit, same as I do. However in my case I don't live with my parents so it's of no concern to me that my landlord has to pay tax on the rent...

The reason that they have taken away the rent a room relief for parents in this scenario, is that the volume of people claiming the rent tax credit while living at home with parents mushroomed in the 2000's, and the view taken was that people were basically exploiting a loophole, as in most cases any money changing hands wasn't really rent, but money to cover household expenses... But this would be very difficult to prove, so they legislated their way out of it.

Clearly in your case, if you're concerned about the aggregate tax consequence, rather than just the impact on your own tax credits, then you'll need to tell them the 375 is to cover household expenses, so that it isn't actually rent.

davidfinglas

thanks for the responses people...

i emailed them there about a week ago to clarify, and surprise surprise, no response...

Clearly in your case, if you're concerned about the aggregate tax consequence, rather than just the impact on your own tax credits, then you'll need to tell them the 375 is to cover household expenses, so that it isn't actually rent.

if i tell them its for household expenses, then i wouldnt really be claiming any rent relief?

davidfinglas

Kristopherus wrote: »

But if you go down that road, they will consider that spending as general household spending, which is not allowable. Also bear in mind that if your mum is a pensioner or in receipt of any welfare payment, then that income will be added to the rental income for taxation purposes. If she is employed and in the lower rate of income tax, then the rental income could very well bring her into the higher rate of tax. A rock and a hard place comes to mind ................

exactly...i think the conclusion is that its not really worth doing unless your living out on your own paying rent to a landlord rather than a parent! [EMAIL="b@stards"]b@stards[/EMAIL] haha!! :mad:

barneystinson

davidfinglas wrote: »

exactly...i think the conclusion is that its not really worth doing unless your living out on your own paying rent to a landlord rather than a parent! b@stards haha!! :mad:

But are you REALLY paying 375p.m. in rent to your mother...??