Rent-a-room relief
I have retired from work and am planning to rent my spare room to a student lodger to supplement my pension. Will I have to pay tax on the rental income?
If you rent out part of your home as residential accommodation, the income you earn is exempt from tax, provided the total paid by the tenant(s) is not more than €14,000 in a tax year and you satisfy the qualifying conditions. This is called rent-a-room relief. It applies to accommodation in your home – which can include a self-contained unit such as a basement flat or a converted garage. It does not apply to rooms that are not attached to your home and it does not apply to rent paid by your child.
You must live in your home as your sole or main residence during the tax year for which you are claiming the relief and the room(s) must be used as residential accommodation. For example, you can claim the relief if you are renting a room to a student for the academic year, but not if you are taking in short-term guests. If you rent a room in your home, residential tenancies legislation does not apply. So, if you are only renting out a room, you do not have to register as a landlord with the Residential Tenancies Board (RTB), provide a rent book to the tenant or ensure that the accommodation meets any minimum physical standards. However, if you rent out a self-contained unit such as a basement flat, the legislation does apply.
The gross income you get cannot be more than €14,000 in a tax year. This includes sums that the tenant pays to you for food, utilities, laundry or similar goods and services. Expenses that you incur are not deducted from gross income. If your income from rent and other services is over the limit, the entire income (not just the amount over the limit) is taxable.
If you qualify for rent-a-room relief, the income is not liable to Pay Related Social Insurance (PRSI), the Universal Social Charge or income tax. Claiming rent-a-room relief does not affect your mortgage interest relief or your exemption from Capital Gains Tax if you sell your home. If you are self-assessed for tax, you can enter the exempt income on the Revenue Online Service (ROS). If you are a Pay As You Earn (PAYE) taxpayer you can use the myAccount online service.
Further information is available from the Citizens Information Service below.