Live in landlord renting multiple rooms and tax/rtb implications

J

Jimjobjim

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Hi folks,

I wanted to seek advice regarding the following situation, the sale of my home has fallen through twice now for different reasons, it is an old period house and has been difficult to sell however it is in good condition and I have maintained it well just buyers pulling out at last minute twice now.

I live alone in the house and it is quite large therefore my plan was to sell and downsize as the costs of maintaining and running it can be quite high and will eventually break me. Someone suggested to me that I rent multiple rooms (2 separate rooms) which would be possible in terms of space and rooms being in very good condition, with me still living here as a live in landlord which would put me into the licensee territory/rent a room scheme scenario. I never intended to be a landlord however cash is getting much tighter and it’s something I would definitely have to consider if I remain here which I have no other choice at present.

Can anyone advise what the tax implications and RTB registration requirements for me would be if I lived in my home and rented to two tenants. My understanding was that the rent a room scheme relief only applies to renting to one tenant which has to be below €14,000 per year to avoid being taxed however a friend stated if you are a live in landlord the rent a room relief would apply to both tenants or licensees. Being honest i’m lost with the tax implications and friend has just verbally stated this I have no evidence to back it up but it is something I may have to consider as cash is becoming tight and house is not selling. Any advice on the tax implications of renting to two tenants would have? I’ve searched online but can’t find the right information. I will follow up with a tax advisor but here has always been a wealth of information.

Any information would be much appreciated

Thank you
 
Jimjobjim said:
Can anyone advise what the tax implications
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It can be more than one tenant but once the combined rent is below €14,000 you are completely tax exempt under the Rent a Room Scheme.

Jimjobjim said:
and RTB registration requirements for me would be if I lived in my home and rented to two tenants.
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None. If they are living in your house they are a licensee and basically a paying guest who can be told to leave at your whim.
 
You first need legal advice. Then you may need tax advice, although if you address the legal side of it correctly, the tax side of it should be very straightforward.

You will also need to get your language correct. If you use terminology like landlord and tenant in your dealings with whoever you rent rooms to, you could well end up tying yourself in knots and scuppering what you're trying to achieve.
 
I wonder if it's possible to avail of rent a room relief (€14,000 a year) and the Ukraine Accommodation Recognition Payment (€800 a month) for the same property?

If you live in the property and offer some rooms for rent normally, and another to a Ukranian refugee, it just might be.

An underlying assumption here is that the ARP is not classed as rent.
 
The Ukrainian support payment isn't taxable, and doesn't form part of the rent-a-room 14K limit. I would have applied but don't fulfill all the requirements (e.g. fireblanket in the kitchen).
You can have both rent-a-room income and a Ukrainian refugee.
You can have 2 or 3 rooms let out tax-free as long as you stay within the 14K limit. My friend asks for a percentage of gas and electricity but I charge a flat rate because it's less hassle.
RTB doesn't apply in respect of lodgers on either scheme.

The extra income might affect any social benefits you have... living alone allowance? So that is something to consider as well as the tax aspect.
 
DannyBoyD said:
Rent a room is very straightforward & I dont know anyone doing it who needs legal or tax advice all other things being equal
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I agree.

The scheme is there to regularise what lots of people are going to do anyway.

There are many tens of thousands of such arrangements out there. The whole point is that it’s very simple to be tax compliant with Rent a Room no matter how big/small your other income is.
 
DannyBoyD said:
Rent a room is very straightforward & I dont know anyone doing it who needs legal or tax advice all other things being equal.

As mentioned, your sharers are not tenants and have the legal status of guests. Keep under 14k a year and you have no tax to pay on the income.
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Oddly enough the OP has himself admitted to being confused on several key points. The combination of the rent a room tax and RTB exemptions is very valuable and it would be an absolute shame if confusion on a key point would either disadvantage the OP or cause them avoidable stress in the event of a later complication.
 
T McGibney said:
in the event of a later complication.
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OP takes in €14,000 a year or under from a licensee or licensees living in spare rooms of a large house along with OP. Rent is all documented and declared to Revenue in beer the RaR scheme.

Seriously, what complication is possible?
 
Dr Strangelove said:
Seriously, what complication is possible?
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An example would be a licensee claiming to be a tenant and seeking RTB protection under tenancy legislation because they have in their possession a document from the home owner using the terms landlord and tenant.

IANAL but in the crazy world that we're in now, any homeowner considering implementing a licence agreement would be crazy not to have the benefit of legal advice unless they are 100% clear on how it should be done.
 
It's simple enough. I had two lodgers at one time when things were tough. I wrote up a T&C for them - just basically saying the rent was x amount, it covered rent and utilities (I couldn't be arsed with arguments) and this was the date they moved in, so rent was due from the 2nd of that month (the date they moved in) to the 1st of the next month etc, and that for the first 6 weeks the notice period was one week. General rules re guests/noise, weekly use of washing machine and so on. Also that I expected them to feed themselves, take part in cleaning the house, the room was their own and I wouldn't go in, but expected them to keep it clean. Also gave general information - bin days, what goes in which bin, local facilities and tranport links etc. Worked out well.

All you need to know is the difference between a lodger and a tenant - and what the max amount is that you can take without going into taxable income.
 
Jimjobjim said:
Hi folks,

.

Can anyone advise what the tax implications and RTB registration requirements for me would be if I lived in my home and rented to two tenants. My understanding was that the rent a room scheme relief only applies to renting to one tenant which has to be below €14,000 per year to avoid being taxed however a friend stated if you are a live in landlord the rent a room relief would apply to both tenants or licensees. Being honest i’m lost with the tax implications and friend has just verbally stated this I have no evidence to back it up but it is something I may have to consider as cash is becoming tight and house is not selling. Any advice on the tax implications of renting to two tenants would have? I’ve searched online but can’t find the right information. I will follow up with a tax advisor but here has always been a wealth of information.
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Don't listen to your friend who hasn't a clue. I'm amazed you need to consult a tax advisor as the scheme is very simple. Also where did you search online, it's one stop google search

Rent-a-Room Relief

This page overviews rent a room relief.
www.revenue.ie www.revenue.ie

All the details you need there and it's pretty simple. There are even very clear worked examples.

Basically make sure the rent does not exceed 14K per annum (so don't be adding on esb bills etc) declare the rental on your tax return and don't register with the RTB.

On a practical side, I'd give the tenants a separate living room and bathroom etc. And make a list of House Rules.
 
T McGibney said:
Oddly enough the OP has himself admitted to being confused on several key points. The combination of the rent a room tax and RTB exemptions is very valuable and it would be an absolute shame if confusion on a key point would either disadvantage the OP or cause them avoidable stress in the event of a later complication.
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I very much doubt a solicitor would have one clue about legal advice on Rent a Room. Tax advisors would only be able to inform their clients on where to put the rent into the tax form.
 
Bronte said:
I very much doubt a solicitor would have one clue about legal advice on Rent a Room.
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Really?

Does the average person know

1. how to properly craft a licence agreement?

2. what to do, and particularly what not to do, to ensure that their current or future licensees don't end up with tenancy rights?

If a solicitor is sufficiently incompetent not to "have one clue" about these questions, they won't last long in business.
 
Bronte said:
Don't listen to your friend who hasn't a clue. I'm amazed you need to consult a tax advisor as the scheme is very simple. Also where did you search online, it's one stop google search

Rent-a-Room Relief

This page overviews rent a room relief.
www.revenue.ie www.revenue.ie

All the details you need there and it's pretty simple. There are even very clear worked examples.

Basically make sure the rent does not exceed 14K per annum (so don't be adding on esb bills etc) declare the rental on your tax return and don't register with the RTB.

On a practical side, I'd give the tenants a separate living room and bathroom etc. And make a list of House Rules.
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Just one wee question.With regard to ["so dont be adding on esb bills etc"]does anyone know if the licensee has an option not to add on the esb bills,utility bills.etc.and thus the 14k refers to chargeing rent only without chargeing the licensee for esb utilities etc..Thanks.
 
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