Rent a Room Scheme Clarification

[liteweight]

Are you sure about that? Even if you are not availing of the rent a room scheme by virtue of receiving more than €7,620 p.a. in rental income?

I asked Revenue and PRTB. I know that's no guarantee but I was told that a tenant in one's PPR is viewed as a lodger. One is stll subject to income tax on entire annual amount if rent a room scheme threshold is exceeded.

Basically, a landlord can deduct interest on mortgage against rental income but someone who rents a room still claims TRS, but pays income tax on rental income.

I'm not sure what happens if property is sold. For example a landlord who sells pays CGT but if an owner/occupier sells, he/she does not, whether there is a lodger or not. I'd like to find something on the revenue site which clarifies the whole thing, but so far, no joy.

 

[Satanta]

Are you sure about that? Even if you are not availing of the rent a room scheme by virtue of receiving more than €7,620 p.a. in rental income?

If you choose to rent out a room(s) in your home, you are not covered by landlord/tenant legislation in Ireland. This means that you are not obliged to register with the PRTB as a landlord, provide a rent book to the tenant or ensure that the accommodation provided meets any minimum physical standards .

Citizens Information


Note: It doesn't mention RaRS in that little chunk of text, but it does above and below, so possible this only applies under RaRS???

 

[ClubMan]

Thanks for the info.

I'm not sure what happens if property is sold. For example a landlord who sells pays CGT but if an owner/occupier sells, he/she does not, whether there is a lodger or not. I'd like to find something on the revenue site which clarifies the whole thing, but so far, no joy.

I presume (but don't know for sure!) that a live in landlord renting to lodgers outside the scope of the RaRS would get partial PPR CGT relief or something?

 

[liteweight]

Citizens Information


Note: It doesn't mention RaRS in that little chunk of text, but it does above and below, so possible this only applies under RaRS???

Thanks for the link Satanta. It's another one of those grey areas really. I don't see how they could view an owner/occupier renting a room in the same way as they view the landlord of an investment property. Revenue couldn't say on one hand, that a landlord can deduct the entire interest on his mortgage while on the other hand, telling an owner occupier, whose rental income exceeds the rars threshold, that he/she cannot but are still subject to the same rules/guidelines as the aforementioned landlord. Or can they?

 

[Satanta]

Or can they?

I'd say it depends on which member of staff you talk to

As you say, seems like a slightly grey area. There are certain situations where the rules aren't clear (e.g. the situation of RaRS and renting to a family member where Revenue appear to have changed the situation - originally not allowed, then allowed, then not allowed!) so not sure they could give a clear answer even if you did ask.

 

[liteweight]

Thanks for the info.

I presume (but don't know for sure!) that a live in landlord renting to lodgers outside the scope of the RaRS would get partial PPR CGT relief or something?

I know that's the way they do it if you run a company from home. Many years ago our solicitor told us that if we ran a company from the house, never to pay the mortgage or any large bills from company accounts as we'd end up with a cgt bill when we came to sell!

 

[ClubMan]

Yeah - I guess that something similar might apply since renting to lodgers is basically running a business from the home. But if anybody needs to know for sure then they should get independent, professional advice.

 

[liteweight]

Yeah - I guess that something similar might apply since renting to lodgers is basically running a business from the home. But if anybody needs to know for sure then they should get independent, professional advice.

I agree but as Satanta and people on other threads have stated, the Revenue rules are open to interpretation. So if you get an accountant who looks at it, smiles and says IMO there's not liability, then it's happy days. But if you get one who shakes his head, sighs and says IMO you're liable, where does that leave you?

There are hundreds if not thousands of people renting one or more rooms in their houses to students. These people used to be exempt but I don't know how they stand now!

 

[ClubMan]

There are hundreds if not thousands of people renting one or more rooms in their houses to students. These people used to be exempt but I don't know how they stand now!

Are you sure that they were ever exempt from income tax on such income?

 

[liteweight]

Are you sure that they were ever exempt from income tax on such income?

I thought I was sure but now that you ask....A few women I know used to do it while their children were young. They told me it was tax exempt but I've no personal experience of it. Thinking about it though perhaps it was that they didn't earn enough to be brought into the tax net? So to answer you Clubman...no I'm not sure.