Home Carer Tax Credit

My wife is a stay at home mom with 3 kids under 6 and but has rental income only at €10,300 less expenses and interest of €7,000 showing a profit of €3,300.

My Income is over €45,000.


Can we claim a Home carer's tax credit ?

You cannot claim the Home Carers Tax Credit AND have your wife's rental income taxed at the 20% tax rate. You need to see which one is more beneficial to you and claim that one.

To have the rental income taxed @ 20% would be a PAYE liability of €3,300 @ 20% = €660

To have the rental income taxed @ 41% and claim the HCC would mean total PAYE payable of €3,300 @ 41% = €1,353 less the HCC of €810 would mean PAYE payable of €543

Therefore it's more tax efficient for you to have the rental income taxed @ the 41% rate AND claim the Home Carers Credit

You should note that if the rental profit is over €3,857 then it is more beneficial to have the rental income taxed @ the 20% rate

eg

1. Tax on Rental income = €3,857 x 20% = €771

2. Tax on Rental Income = €3,857 x 41% = €1,581 less HCC of €810 = €771

So the €3,857 is the break-even point at which there is no gain or no loss from either choice