Rent a room exclusion...Can't pay a parent?

athtrasna

Does anyone know the logic behind parents not being allowed to avail of rent a room relief? Surely this is a disincentive for parents to disclose that they're getting money from their offspring?

Thinking of a case where someone moves home to save for a mortgage or because they have lost their home but gives a few hundred euro a month.

A parent declaring income from a child is new to me but I'm informed it does happen!

L1011

To stop claiming of rent allowance by kids to give to their parents tax free was the logic I was told of.

4ensic15

A child can gift a parent 3k a year tax free! The child can also pay for fuel used etc and food consumed so the parent is unlikely to have any taxable income if it is handled correctly.

Marcusm

It would be unusual for the state to recognise contributions by a family member to the shared costs of running a family home as income. It would not only open claims for additional social welfare payments but also raise the question about why it had not previously been taxed. That would have been opening floodgates of derision and very little actual tax revenue.

J.pilkington

Because the parent isn't paying tax on the rent from the child!

Mrs OBumble

Marcusm wrote: »

It would be unusual for the state to recognise contributions by a family member to the shared costs of running a family home as income.

Eh? The income received by adult children (age 18+) is regularly considered when setting the income-related rents charged of social housing tenants.

It is expected that these adult-children will pay their share in the running of the household. But I don't see that as income for their no-longer-legally-liable parent

BoatMad

athtrasna wrote: »

Does anyone know the logic behind parents not being allowed to avail of rent a room relief? Surely this is a disincentive for parents to disclose that they're getting money from their offspring?

Thinking of a case where someone moves home to save for a mortgage or because they have lost their home but gives a few hundred euro a month.

A parent declaring income from a child is new to me but I'm informed it does happen!

its essentially the rules regarding " connected parties " , rules that pervade tax law from one end to the other

Because the idea of paying rent to live at home is ridiculous.

athtrasna

Benjamin Damp Snorer wrote: »

Because the idea of paying rent to live at home is ridiculous.

Be that as it may but it's a specifically listed exemption from the scheme

BoatMad

athtrasna wrote: »

Be that as it may but it's a specifically listed exemption from the scheme

again its the doctrine of " connected parties " , far to easy for parents to give income to kids where no further income tax is paid for by the child and then subsequent rent tax relief is then availed of

where you to correct that and then force the child to pay income tax on any monies received from the parent in order to affect payment of the rent , then the system would be a net loss to the parent who would be better letting the child stay rent free

" connected parties "

J.pilkington

BoatMad wrote: »

again its the doctrine of " connected parties " , far to easy for parents to give income to kids where no further income tax is paid for by the child and then subsequent rent tax relief is then availed of

where you to correct that and then force the child to pay income tax on any monies received from the parent in order to affect payment of the rent , then the system would be a net loss to the parent who would be better letting the child stay rent free

" connected parties "

that makes very little if any sense.

Plus you are getting your taxes mixed up.

BoatMad

J.pilkington wrote: »

that makes very little if any sense.

Plus you are getting your taxes mixed up.

a child ( of whatever age ) is defined as a connected party , that means that there is not a Hands off relationship between both sides of the transaction

as I said

in case (a) , its too easy to allow income to be siphoned to the child to pay rent and then rent a room relief claimed

or even if you could implement it , having the child declare any monies received to pay the rent from parents as income tax, would make the transaction more disadvantageous then giving the room for nothing

There are large numbers of special case revenue rules around connected parties all over the revenue acts

dearg lady

I remember back when the rent tax credit was freely available, people suddenly realized they could claim a credit for the money they were 'paying' to their parents, and there would be no income tax for the parents under rent a room. Most weren't paying a cent to their parents and were essentially just claiming money for nothing. I think one person did it, and the story spread, Every single person in my office applied. Shortly after they removed the rent a room relief for children/parents.

dearg lady

Benjamin Damp Snorer wrote: »

Because the idea of paying rent to live at home is ridiculous.

I really don't get this thinking. From when I started working at 16 I contributed, it was token amount at that stage as I worked part time. But once I started working full time I contributed maybe 80 quid a week. It's still significantly less than rent + bills, but I really don't see why an adult living in a house isn't contributing to the bills/running of that house. To me that is much more ridiculous.

Bubbaclaus

Benjamin Damp Snorer wrote: »

Because the idea of paying rent to live at home is ridiculous.

Not if you're an adult child.

Elliott S

dearg lady wrote: »

I really don't get this thinking. From when I started working at 16 I contributed, it was token amount at that stage as I worked part time. But once I started working full time I contributed maybe 80 quid a week. It's still significantly less than rent + bills, but I really don't see why an adult living in a house isn't contributing to the bills/running of that house. To me that is much more ridiculous.

Agreed. When I was living at home, I contributed fully to all the bills and groceries and gave a little bit extra in acknowledgement that an extra body in the house adds to the wear and tear. I'd also buy my folks steak and other nice things every few weeks to cook for dinner. I cannot imagine living at home, earning a full wage or salary and not contributing. Paying a small rent to one's parents is not going to prohibit a person from saving for a mortgage. My parents aren't flush so no way would I leech off them in such a manner. I dunno, maybe it's different if someone's folks have plenty of money. But I'd still feel utterly ridiculous not contributing. You'd still be well below market rate in rent so it's utterly miserly not to do so.

seamus

dearg lady wrote: »

I remember back when the rent tax credit was freely available, people suddenly realized they could claim a credit for the money they were 'paying' to their parents, and there would be no income tax for the parents under rent a room. Most weren't paying a cent to their parents and were essentially just claiming money for nothing. I think one person did it, and the story spread, Every single person in my office applied. Shortly after they removed the rent a room relief for children/parents.

This. One of the main issues with connected parties is the widespread claiming of reliefs and credits on costs that have never been paid. In particular there used to be some threshold (€6k a year I think) where someone could earn rental income tax-free and the "renter" could claim tax credits on it. So a parent simply prints up some bogus "receipts" for €6k a year in rent payments and the child claims back relief/credits on that €6k.

You're not likely to allow a non-family member to live rent free in your house and also tell the taxman that they've been paying you rent. You'd do it for family though.

Marcusm

Mrs OBumble wrote: »

Eh? The income received by adult children (age 18+) is regularly considered when setting the income-related rents charged of social housing tenants.

It is expected that these adult-children will pay their share in the running of the household. But I don't see that as income for their no-longer-legally-liable parent

I meant as income for tax purposes! Shared occupation on a family basis is different to third party occupation. It's only correct that all adults income is taken into account in determining council rents as that is the nature of a social tenancy.