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Renter tax credit - unregistered tenancy

  • 09-10-2022 9:50pm
    Registered Users Posts: 288 ✭✭

    I'm currently renting an apartment which I know is not registered with the RTB. I also know that the LL does not pay tax on his rental income. I know this because he told me out straight at the start in case I wanted to "claim anything". I suspect he was referring to HAP.

    So far, so foolish on the LL's part.

    Anyway, I do actually have a signed lease which appears to be a template style one which you'd find online, so there can be no argument at all that a tenancy exists (he can't claim that he lives here and I'm a licensee for example).

    The rent was market rate when I started the lease early last year and now it's less than market rate, as happens with basically all tenancies now due to RPZ rules. In fairness, he's never mentioned applying the two per cent he would be entitled to.

    Generally he's been fairly sound to deal with, although I've actually only had to contact him once or twice about fairly minor stuff and I've never had any issues with paying rent on time etc.

    Anyway, obviously I want my 500 rental tax credit, and from what I read the tenancy would need to be registered for that to happen. I could just contact the RTB or even just claim the credit and see what revenue say but it would probably be sounder to give the LL a ring and try and negotiate a rent reduction of 500 over the course of the year, or all at once.

    He probably won't be happy with this but he's really done a bad job at covering his tax avoidance here so I guess that's his tough luck.

    I feel bad having to ring him and basically imply that I'm going to report him to Revenue if he doesn't reduce my rent, but I also don't see why I should miss out on 500 euro just because he doesn't want to pay tax.

    I'm not worried about being kicked out as I'm looking at buying early next year anyway.

    Thought it was an interesting situation anyway, anyone see any pitfalls to my strategy?



  • Registered Users Posts: 13,195 ✭✭✭✭Dav010

    Are you paying him in cash?

    Silly on his part with all the rights a tenant has, to expect them not to apply because he isn’t declaring his income.

  • Moderators, Sports Moderators Posts: 23,863 Mod ✭✭✭✭CramCycle

    Your rent hasn't gone up? If he had increased it would it be equivalent to the 500?

    The old credit you just put it in on your P21 claim, not sure if it's as simple now.

    As for the pitfalls, 500 is nice but your leaving next year and he sounds like an oK landlord. Quite possible he wouldn't reach the tax threshold so silly of him but is it worth making it awkward for the last year?

  • Registered Users Posts: 308 ✭✭DFB-D

    Which has the higher value?

    500 for each tenant vs 2% of the rent, etc.

  • Registered Users Posts: 1,039 ✭✭✭DubCount

    This was announced in the budget, but all the terms and conditions wont be clear until the Finance Bill is published. The requirement for RTB registration may be included, but I reckon the Tax credit will apply to people who are renting a room in the Landlords home (Licensee) and they have no requirement to register with the RTB. I think its too early to know yet.

  • Registered Users Posts: 3,759 ✭✭✭blackbox

    This is an excellent policy that leads to more compliance.

    The government should introduce tax relief for everyone for all expenditure that involves the labour of someone else.

    This would help to eliminate people/businesses from offering "cash" prices and reduce the black economy.

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  • Registered Users Posts: 13,195 ✭✭✭✭Dav010

  • Registered Users Posts: 3,759 ✭✭✭blackbox

    It might increase the rent for a few, but at least it would create a level playing field for landlords and tenants that are compliant. A higher level of compliance should benefit tenants.

  • Registered Users Posts: 288 ✭✭Jmc25

    Interesting points about the 500 euro vs a 2 per cent increase. I hadn't thought of that. I've just worked out that the 500 would be slightly more and obviously I'd also be entitled to a proportion of the 500 for next year for the months I live there.

    So I reckon we're talking about 300ish hundred euro over all. Agree it's debatable whether I should even bother for that amount of money.

    A few posts have mentioned the below market rate rent as a reason for me not to rock the boat here. Just to clarify, it's only below market because since I took out the lease new asking rents have increased by about 10 per cent vs 2 per cent allowable under RPZs (the LL in fairness has not even applied the 2 per cent). Any tenancy which commenced when mine did would similarly be below market rate for that reason, so I don't have any kind of special deal here.

    I'm fascinated though by the posts which sympathise with the LL. While he seems to be a decent guy (in the limited interactions I've had with him), he's evading tax and not being very clever about it. Surely no one has sympathy for tax evaders facing (very minor in this case) consequences of their own actions?

  • Registered Users Posts: 13,195 ✭✭✭✭Dav010

    True, but the few might not be too happy to pay more.

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  • Registered Users Posts: 13,195 ✭✭✭✭Dav010

  • Registered Users Posts: 2,633 ✭✭✭...Ghost...

    You've been facilitating his tax EVASION (not tax avoidance) , so you're no different except for the fact that a carrot of 300e is sufficient for you to claim the high horse because 'ah well I'm leaving next year anyway.

  • Registered Users Posts: 1,603 ✭✭✭dennyk

    If you are leaving next year anyway, you're probably better off trying for the credit. One of the purposes of the rental credit scheme is to collect data on tax-evading landlords, so it's very likely there will be some process in place to claim the credit even if your landlord isn't registered, especially since they'll be allowing licensees (whose license arrangements aren't registered at all anyway) to claim it. The whole system won't be in place until early next year anyway, and it would take at least 90 days for any rent increase to go through (and odds are your cowboy landlord hasn't bothered to research the regulations and will fail to issue a rent review notice correctly, thus delaying it even further), so you wouldn't really have to worry about your landlord retaliating by raising your rent (or at worst only have to pay a bit more for a couple months).

    On the other hand, if you try to extort a €500 rent reduction from your landlord now, he might retaliate in any number of ways, ranging from the perfectly legal (such as a rent review and increase of 2.x% effective in 90 days, or a termination notice because he's decided that he'd rather sell the place than take a 50% haircut on his rental income) to the "illegal but will still cause you a massive amount of hassle" (such as having a few hard lads stop by to gently encourage you to take a walk and get some fresh air, and once you get out of the A&E you'll find the locks changed and all your stuff hauled away to be dumped in a skip or listed on Donedeal).

  • Registered Users Posts: 288 ✭✭Jmc25

    No, even more foolishly on his part, he asked me to pay into his bank account.

  • Registered Users Posts: 288 ✭✭Jmc25

    I wouldn't have thought I'm facilitating anything. Certainly not legally speaking anyway.

    Are you saying I should have reported him to Revenue up front when he told me about the fact that he wasn't paying tax?

  • Registered Users Posts: 288 ✭✭Jmc25

    Yes very fair points here, perhaps best not to rock the boat by offering an off the books solution, and to simply apply for the credit and leave him to deal with the consequences.

    And, as mentioned already, the difference between the credit and a 2 per cent increase which I'd likely be slapped with for asking the question would be small.

  • Registered Users Posts: 13,195 ✭✭✭✭Dav010

    If you are paying into a bank a/c and he told you he didn’t want you to apply for benefits because he wasn’t paying tax, I suspect he was in effect telling you he wouldn’t accept to if you were a HAP recipient. It might be a misguided way of getting around discrimination legislation, but seems to be affective.

  • Registered Users Posts: 3,193 ✭✭✭Eircom_Sucks

  • Registered Users Posts: 3,193 ✭✭✭Eircom_Sucks

    what if that cnut of a landlord is giving is giving cheap rent , not asking for increases and leave the tenant alone ?

    why is he a cnut when this country is bending everybody over and screwing them left right and centre

    why pay tax when he is already paying enough interest on the mortgage

    and don't give me the " but its the law " yes it may be so , but who in the government is abiding by the law ? everyman for himself

    and if this tenant is getting cheap rent and being left alone then he is worse than the landlord in my eyes

  • Registered Users Posts: 13,195 ✭✭✭✭Dav010

    At the very least, the op is facilitating tax evasion, and has done from the start as he/she knows it. But that is not to say blame should lie with the op as he/she has been paying the rent into a bank account, as is the conventional way of doing so.

    I would be amazed if this LL wasn’t paying tax, the rent is in his bank account, even the most sheltered LL knows that tenants have extensive rights, and you have to be fair stupid to voluntarily tell a tenant that you are going to evade tax.

    My guess is the LL doesn’t want HAP tenants, and gave the op an excuse, a rather stupid one, as to why he/she shouldn’t apply for it.

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  • Registered Users Posts: 393 ✭✭Starfire20

    the LL isnt paying any interest on the mortgage, the tenant is via the rent.

    The tenant pays the mortgage and the LL creams some further profit off the top for himself.

    why should this LL be tax exempt?

  • Registered Users Posts: 578 ✭✭✭ddarcy

    not sure what the new bill will bring, but typically you have 4 years to claim the credit. So you could be in your new house and then claim it.

  • Registered Users Posts: 288 ✭✭Jmc25

    Ah, yes good point and that could well explain why he was that open with me. On the off chance I ever reported it there'd be nothing to report, and he's avoided taking a HAP tenant.

    The tenancy definitely is not registered though but that could be unrelated.

  • Registered Users Posts: 2,633 ✭✭✭...Ghost...

    You said the LL doesn't pay tax on the rental income and there is no rtb registration. If these statements are true, then you are by default facilitating his tax evasion as you are not concerned about the lack of registration. Only now it interests you because of the tax credit for tenants.

  • Registered Users Posts: 288 ✭✭Jmc25

    Interesting view.

    I definitely don't feel any personal responsibility for my LL evading tax or failing to register the tenancy with the RTB and I doubt many in my situation would.

  • Registered Users Posts: 288 ✭✭Jmc25

    This certainly seems like the smartest suggestion of the bunch alright, assuming the four year window for claiming applies.

  • Registered Users Posts: 2,633 ✭✭✭...Ghost...

    And people who pay drug dealers for their habit don't feel any way responsible for the crime and loss of life caused by the trade. I'm alright Jack.

    You don't know if your LL is actually evading tax. Claim your credit and stop trying to justify it.

  • Registered Users Posts: 17,801 ✭✭✭✭Donald Trump

    I reckon there will be a lot of tenants who negotiate equivalent reductions in rent with their tax evading LLs ...... only for the tenant to submit for the 4 years back credits in 4 years time if that is the case.....

  • Registered Users Posts: 17,801 ✭✭✭✭Donald Trump

    Well the OP could happily let him fire away and do all those things you suggest, and use any subsequent court award towards his own property.

    The landlord is by definition a property owner, and hence would have assets that could be recovered as compensation were he to go down that road

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  • Registered Users Posts: 13,195 ✭✭✭✭Dav010

    We are not talking about drugs here, the op is not doing anything illegal and has no responsibility nor obligation relating to the LLs tax compliance. The op is paying rent into a bank account, what more do you think he/she should do?