Rent A Room €14k tax free query

R

Roro999

Registered User
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If one rents rooms in their house and arranges €14k in rent plus bills is the full amount taxable ?
 
noproblem said:
It's a rent A room in one's PPR
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It's not.
You can rent as many rooms in your PPR as you like.
But the total income must be <= €14k.
If it's above €14k then the rent a room scheme doesn't apply, all rental income is assessable for income tax etc. as in any rental property situation, and PPR benefits such as CGT exemption are lost for the period of rental.
 
AndroidMan said:
That amount includes any bills the renter(s) pay.
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From the Revenue Tax and Duty Manual Part 07-01-32 Rent-A-Room Relief...
 
Does the 14k include electricity,oil,gas,tv,refuse,wi fi.etc.Thanks.
 
I remember I talked to a guy in a course reckoned this was a great way to hide cash

Reckoned no one ever checked if room actually rented.

Bet he wasn't the only person to think this.
 
The handful of instances I know of Rent a room were all misuse. (e.g. Owners back with parents - house fully rented out). Also if some rent a roomer posts a query here it often raises eyebrows - we'd one poster who remembered after a few questions that he stays at the house for whatever the exact minimum time a month was.

I've not heard of people using it to disguise other income as rent a room - but I'd not be surprised - there's nothing to stop someone trying it.

Revenue are not physically checking who's living in rent a room houses.
Why can I be so certain? They would have needed to hire more staff for that unpleasant tv-license inspector type of work and which would not be 9-5. Regular Revenue staff would have gone on strike if asked to take it on. It would have been a big deal.

The best revenue can do is strongly query rent a room during an audit, it should be tougher to lie your way around the fact you don't rent out anything but are just effectively laundering tax-free cash. The people doing that probably would be skilled at lying though.

The scheme should be wound up and replaced with a general landlord tax relief, i.e. tax relief on first 10k of all rental income.
 
Hardly. any need for that.

Start with the electoral register. Then their own records of taxpayer names & addresses, along with details extracted from VRT registrations, utility bills, motor tax & insurance renewals. There is no end to what they can do.
 
I suspect that criminals have more "efficient" means of laundering ill gotten gains than doing it €14k at a time using patsies to exploit the rent a room scheme...
 
ClubMan said:
I suspect that criminals have more "efficient" means of laundering ill gotten gains than doing it €14k at a time using patsies to exploit the rent a room scheme...
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By laundering I wasn't literally talking about money from criminal gains - I was referring to the suggestion made by Frank above. We're not talking criminals or even large amounts of individual tax evasion.

Say a cash in hand tradesperson (they do exist - though it wouldn't surprise me if some posters will take a contrarian view to even that) takes home an income of 60,000 a year, most people like to put money into bank accounts at some stage, that tradesperson could try to claim 14k of the cash deposits were actually due to rent a room income and save a few grand in tax.

So the money that comes from cash in hand is made to look like income from rent a room - being cleaned up a bit even if not laundered in the definition of the money coming from illicit activity.

As for T McGibney's point there's no end of what revenue can do - that is correct - they do have extraordinary power. However there's also the simple problem of they can only audit so many people per year and spend so much time on each one. Someone particularly on the lower rate of tax + rent a room is less likely to be audited than many other higher earners. This will change if Revenue speed up their auditing.

The rent a room tax users I once knew made sure to have all bills and addresses relating to the rental in their name (they made it sound like the steps needed were man-in-the-pub-common-knowledge). They felt they were ready if Revenue ever called them up on it - Revenue need something better than hoping they were dumb enough to move their address away from the rented house.
 
They audit nearly nobody anymore. A small number of thousands of audits are completed nationwide each year and none will be in the category we're discussing here as they're simply too small to bother auditing.

For perspective, the average yield per audit is now in the region of 60k to 70k per audit. This is in stark contrast to 15/20 years ago when most audits yielded nothing. Today, audits are heavily targeted on cases where Revenue's data suggests more than likely that there are substantial tax underpayments happening.

Minor stuff like rent a room scheme queries, medical expenses verifications, substantiation of tax relief claims, VAT return verification etc are all done by means of what are or were until recently termed aspect queries. There are around 500,000 of these completed each year and while the average monetary yield from these exercises is a pittance compared to the average audit, collectively they collect more money than audits do. When an aspect query uncovers evidence of major evasion, it will probably be upgraded to an audit.

So it's a very dangerous for anyone to assume that Revenue don't look closely at small scale evasion.
 
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