Rent-A-Room and principal private residence query?

C

Carmar

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My husband and I recently bought a house in Dublin with a view to our 4 kids being able to stay there when going to college over the next years. At the moment our oldest is living there and the other rooms are rented to other students. Am I correct in thinking that we can not avail of the Rent-A-Room scheme as it is not my husband and I's principal residence, although it is my oldest's primary residence.
 
Correct, but my understanding is that your son can avail of the scheme as its his primary residence.
 
Thank you for your replies. Our son does not pay rent to us as he is a student and we are supporting him.
 
Carmar said:
Our son does not pay rent to us as he is a student and we are supporting him.
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You can allow your son to live in a house you own rent-free with no tax implications if he is under 25 and in full-time education.

Once he is managing the rentals and receiving the rent it is arm’s length from you as parents. Any rent received is not your taxable income, it’s his. And of course anything up to €14k is tax free for him under the rent-a-room scheme.
 
Thank you. I hadn't considered this. So he can live in our house, rent out the other rooms, avail of Rent-A-Room Relief and pay at lower tax rate than his parents would have?
 
If the income is less than 14k, he pays no tax. And that is an annual balance, his income might not breach it this year. And plan carefully how much to charge next year, it may actually work out financially better to have less rooms rented out if he compares full potential rent but taxed/prsi/usc v the 14k. Check how bills work, I assume any contribution to them is included in the 14k.
 
I just see now that:
If the gross rental income does exceed the exemption limit, the total amount of income is taxed.
So atm the rental income does exceed exemption limit so we can't claim Rent-A-Room. Maybe when all my kids are living in the house, the rental income will not exceed the exemption and then we could consider it.
 
I presume if he's kicking the rent back to you (his parents) then Rent A Room no longer applies, as you're the beneficiaries. He either collects and keeps the rent himself or he gives it to you and you have to pay tax on it.
 
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