By virtue of L.N. 258 of 2020, entitled – Private Residential Leases (Tax Rebate) Rules, 2020 – all rental income derived from 1st January 2020 onwards from private residential leases with a duration of 2 years or more shall be entitled to a tax rebate on the condition that such income is taxed at the rate of 15% according to the relevant article under the Income Tax Act (ITA).
The abovementioned rebate is to be determined after certain specific and exhaustive characteristics of the residential lease contract are taken into consideration, including:
- Duration of the lease and,
- Number of bedrooms.
| Lease Duration | No. of Bedrooms | Tax Rebate |
| At least 2 years BUT less than three years | 1
2
3+
| €200
€300
€400
|
| Three years or more | 1
2
3+
| €300
€400
€500
|
The Legal Notice also highlights that, in respect of the year during which a lease commences or is terminated, the amount indicated above under the heading ‘Tax Rebate’, shall be calculated pro-rata to the number of days for which the lease is in operation for that year. In addition, the herein mentioned tax rebate cannot exceed 15% of the rent derived in that year from that particular lease.
It may be added that the responsible commissioner may request further material and may make such reviews, including reviews with the relevant authority, as he may consider essential in order to approve the validity and the rightness of a claim for a rebate under these rules and he may refuse a claim in any case where he has reason to believe that any of the conditions for the rebate has not been satisfied.
Ultimately, in the event that the abovementioned commissioner believes that a rebate was granted to a person under these rules but was not actually due, he may request that person to pay an amount of tax equivalent to that rebate.
About the Author
This article has been authored by Bjorn Camilleri, CSB Group Legal Trainee. For any additional information or support required please contact us on [email protected].
