I know of several people who are earning more than the 14 k pa. No tax return being done. All cash in hand. It is grossly unfair that that this can take place while rents are stagnant for an apt/house where a landlord has invested life savings, is paying a BTL rate and often obscene ‘management’ charges. With marginal tax rate applied how are small landlords going to stay in the business ?
Rent a room scheme may be extended to all landlords.
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my somewhat cynical view is that this is the reason the €500 tax credit was introduced; an easy way to pick up on anyone not reporting their rent a room income.
So why don't you report them?
Reporting shadow economy activity (tax evasion)
This page explains on how to report illegal activity to Revenue
www.revenue.ie
You clearly don't see the difference.
Every landlord in the country can avail of the rent a room scheme if they wish to like anyone else...you just have to let someone move into your own home and share your property with them
Really?
The key wording is 'room'. Not every household has a 'spare' room to rent out to a lodger...
Dr Strangelove
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having a lodger in your house or letting it outright are very different things even if the same number of people are housed in either scenario.
At this point the difference in tax and regulatory treatment is very stark and it’s hard to justify by reference to any policy objectives.
Gordon Gekko
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I can’t believe that this is even being debated. Rent a Room involved someone living with you. A tenancy involves letting out some other piece of property you have as an investment. They’re completely different. With Rent a Room, you’re chatting with the ‘tenant’ over your breakfast.
The tax evasion point is whataboutery. It’s just noise. There’s tax evasion in almost all walks of life. Everyone’s free to report nefarious activity should they so wish.
The tax evasion point is whataboutery. It’s just noise. There’s tax evasion in almost all walks of life. Everyone’s free to report nefarious activity should they so wish.
T McGibney
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Enough here in this disgraceful case to justify the permanent abolition of the RTB. It is truly a thundering disgrace.
While I agree with you there is something perverse about the tenant who is renting out a room for €1160 a month ending up with a far higher net income (after taxes and costs) from that room than the landlord will end up with from renting out an entire house for €2800 a month.
I agree, they are totally different. One set up you can rent a room or several in your house for an income of 14 k tax free since 2017. You can even built or buy a house with the goal of renting a room in a self contained unit. In the other set up, having followed all the rules and rent restrictions and price restrictions from day 1 (2015 in Dublin), one can rent a 2 bedroom apartment for less or barely more than 14k, pay management costs, maintenance costs, insurance, rtb... And pay tax on the remaining as well as lpt. I am not even talking about the risk one has to take in the investment or the mortgage one might have or the difficulty and costs that might arise with some tenants.
So yes, I fully agree, a totally different set up. One might say, it's an investment.
But to me, if one bought a 6 bedrooms mansion with a self contained unit to live and rent a room, it would also be an investment and one would not have to pay CGT on it when/if sold.
Some might say only LL with long term tenants who didn't increase the rent regularly are in that unfortunate situation. That is generally the line followed. But while I have no idea how many LL are in this situation, I certainly know that I increased within the law from day one and the rent was set up appropriately in 2014.
It's true, one renting a room might sit in front of the renter at breakfast. One could also say that the renter of a 2 bedroom apartment have full and unlimited access to a spare bedroom, a bathroom , a kitchen and a sitting room without having to sit down for breakfast with his landlord every day. So yes quite different. In this case the renter might even decide to rent that spare bedroom and make an income of up to 14 k tax free.
While one set up is encouraged and frankly seem to lead very high room prices in Dublin, the other is largely despised.
So yes, I fully agree, a totally different set up. One might say, it's an investment.
But to me, if one bought a 6 bedrooms mansion with a self contained unit to live and rent a room, it would also be an investment and one would not have to pay CGT on it when/if sold.
Some might say only LL with long term tenants who didn't increase the rent regularly are in that unfortunate situation. That is generally the line followed. But while I have no idea how many LL are in this situation, I certainly know that I increased within the law from day one and the rent was set up appropriately in 2014.
It's true, one renting a room might sit in front of the renter at breakfast. One could also say that the renter of a 2 bedroom apartment have full and unlimited access to a spare bedroom, a bathroom , a kitchen and a sitting room without having to sit down for breakfast with his landlord every day. So yes quite different. In this case the renter might even decide to rent that spare bedroom and make an income of up to 14 k tax free.
While one set up is encouraged and frankly seem to lead very high room prices in Dublin, the other is largely despised.
Gordon Gekko
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It’s a fair point in some ways, but equally it’s not like for like. The purpose of Rent a Room is to create additional capacity in people’s homes. It’s an incentive scheme for something different. Personally, I’d want ‘danger money’ to have some randomer living in my house with me.
I thought that too. But it's not. I was helping our lodger claim it back as she didn't have a clue.
In the bit where you type in the amount of rent you're claiming credit for you don't put in the whole rent for the year. You put in €2500, as the max you can claim is 20% of $2500. When she put in more she got an error.
It seems daft as it would be an easy way to catch people going above the €14K threshold with multiple rooms.
T McGibney
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Why would they want to catch such people out when accommodation is so abjectly scarce?
Well they could increase the allowance rather than ignore people evading tax.
Or maybe they're ignoring the issue as increasing the allowance would probably have major resistance.
I don't see how
Exactly, Revenue are not thick and they love catching tax evaders. They must have been instructed from 'on high' not to cause trouble with the tax credit. The easiest way to do this is not record the necessary data, because if they have the data and it shows tax evasion they are required to act on it.
T McGibney
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They're not required to act on anything, actually. They can instead sit on information for years and pounce when many years' tax liabilities have snowballed into a considerable sum inclusive of interest and penalties and then either put the frighteners on people to settle en masse within a tight timeframe or introduce some minor tweak to for example in this case CGT PPR exemption claims to penalise those whom they know have abused a tax relief.
There's no rope as long as time.
9For me, it not the evasion that is going on. As you say, this happens everywhere. It's that a scheme exists where people can make more money from the letting of one room than they could possiy make from letting the whole property. As stated by @Purple, it's perverse.
Can they? Are there many rooms going for > €1000 a month. The going rate where I am, in Dublin, is about €600pm. That'd be for one person. I suppose it'd be more if you rented to a couple. I wouldn't fancy that though.
Plus you're not just renting the room. You're sharing the house. There is some inconvenience in that.
I'd argue it from the point that a landlord has much less rights than somebody renting to a lodger. I looked into renting a house out a few years ago. The risk to me wasn't worth the reward so I didn't bother.
For renting a room, we didn't want to do it at the time but after doing it for a few years now, we're happy to do it forever.
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I'm renting a house for €1700 a month in Dublin. I doubt my landlord is netting €600 a month after expenses and taxes.
The Horseman
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I can tell you a single (box) room is €600 but a double is going for more than that and I am in Dublin and see it all the time.
To put this into a simple context for a landlord to net €14k a year they would need to be charging rent of a min of probably close to €3k per month to cover all their costs (excluding mortgage payment of the principle).
The rights of landlords v owner occupiers is vast. Have you ever read the horror stories of troublesome tenants and the problems landlords have getting them out?
Trust me the vast majority of difficult tenancies don't even get as far as the RTB because from a landlords perspective its a waste to time, stress and money. Landlords are paying tenants to leave (even after having followed the correct procedure).
The Govt have rightly scre**d up the housing sector and for the record I am a landlord for 15 yrs.