How does rent-aroom tax relief work?
I want to build three separate rooms in my house with their own entrances and rent them out to three individuals. These rooms will also have their own kitchen and lavatory. I’ll be living in my own part of the house. Am I able to claim the rent-a-room relief? MA, VIA EMAIL
From the situation you describe, it doesn’t sound like you can.
The scheme applies only to landlords who let a furnished room to a lodger in their own home, or to those who run a guesthouse or bed and breakfast. Short term lettings, such as those found on Airbnb, are covered. The first £7,500 earned from letting out rooms in these cases is tax-free.
But it sounds as if you plan to create separate residences, which are not eligible.
There is an exception if you let furnished accommodation in a self-contained flat where the divisions of the room are temporary. There are no hard and fast rules about what constitutes a “temporary division” but as you plan to install kitchens and bathrooms it will be hard to argue that the divided residences are temporary.
Our expert reporters and answer readers’ questions. This week: rent-a-room tax relief, no-claims discounts and using a trust to avoid the stamp duty surcharge