# Rent a room scheme to avoid tax/tenancy implications



## tenchi-fan (8 May 2010)

I am going abroad to work for a year before the end of this year. I would only be renting an apartment abroad.

I want to rent my 3 bedroom house out to keep the mortgage covered and I'd make up any shortfall. I only purchased the house last year and the mortgage is €117k over 40 years (it's pretty modest!). So I would set rent at around €390 per month + ESB and a deposit of around €500. 

I have family who could collect rent while the neighbours either side of me are pretty friendly and would tell me if the place was being used for parties or if it was sublet to 20 chinese students. 

I was thinking the rent a room scheme would be ideal. I could rent out "a" room and of course the occupier would have access to the rest of the house including 2 bedrooms. The box room would be retained by me to store my stuff. Technically I'd have occupied the house during both 2010 and 2011 - just not the entire year.

Basically, this will cut out a lot of hassle: losing trs, possibly paying cgt down the line, tenancy rights incl minimum standards, rent allowance (not permitted as room costs more than €66 per week), income tax, etc. And the person I am renting to would save on the market rate of rental houses and wouldn't have to commit to a lease (which wouldn't be worth the paper it was printed on anyway as I would be abroad and not able to follow it up). Stamp duty doesn't come into it given the low cost price of the house.

I know this is against the spirit of the rent a room scheme but I want to do things by the book, just with as little paperwork as possible! 

Would this arrangement work? Or would someone in "the system" make my life a misery?


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## mathepac (8 May 2010)

Essentially your scheme is one of tax evasion. As you are not resident in the house (it is not your PPR, demonstrably your rented overseas apartment is) the rent-a-room scheme cannot apply. This makes you a non-resident landlord, so your tenants must deduct 20% of the rent on behalf of the Revenue, or your locally appointed agent does so on Revenue's behalf.

All of the above and other implications relating to insurance, non-registration with the PRTB, TRS eligibility, potential stamp-duty claw-back, non-supply of BER certificate, etc. etc. have all been discussed before on AAM at great length.


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## tenchi-fan (8 May 2010)

I wonder would this situation change if I said, rather than renting one apartment abroad, I simply lived in hostels or other forms of short-term/temporary accommodation. The work visa I will be travelling on is a working holiday maker visa. 

For tax purposes I would not have become non-resident in Ireland, while I also would not have an alternative principal private residence. 

Surely by spending 80% of 2010 in my home in Ireland means it would be my PPR for the year in question. 

Then in 2011 my home in Ireland may be rented out for say 6 months while I work abroad, followed by 3 months being rented out while I travel in the US/Canada (genuinely a holiday), followed by me returning to live here for the last 3 months of 2011. 

Thanks for your help, mathepac, and I'm not trying to be argumentative. I just want to explore all options.

tax avoidance rather than tax evasion


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## Sheeva (5 May 2011)

Hi, there is my first post and I didn't want to start a new topic. My question is: is there any site where I could find ads with people who adopted the "rent a room" scheme? I will be living in Birmingham, UK since October, I found out about this opportunity to get, as a student, a low price room, but I don't know where to find landlords


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## T McGibney (6 May 2011)

Sorry, posted reply in error to long-dormant discussion.


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## T McGibney (6 May 2011)

Sheeva said:


> Hi, there is my first post and I didn't want to start a new topic. My question is: is there any site where I could find ads with people who adopted the "rent a room" scheme? I will be living in Birmingham, UK since October, I found out about this opportunity to get, as a student, a low price room, but I don't know where to find landlords




Unfortunately, Rent a room is an Irish scheme.


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