Rent a Room Scheme

[Tazamount]

Hi

Would appreciate advice on the following

I am an owner occupier of a 2 bed apartment and have availed of the Rent a Room scheme for the last 18 months.
However, the location of the apartment no longer really suits my new job location and I'm considering privately renting in the area of the city where my new job is.
I suppose I'm just wondering does that mean I would be automatically reclassified from owner occupier to investor overnight?
If I continued to keep my bedroom in my apartment i.e. just continue to rent the second room under the rent a room scheme then surely that would be okay,albeit that I would be paying for the rental of 2 rooms (the rent I pay through my mortgage to myself and the rent that I would pay to another landlord when privately renting another room)

However, I was interested to see the increase in the RaRS to €10k.
Is there anyway I could rent my 2 bedrooms individually and avail of relief up to €10k under RaRS or would my claim be dismissed because I had moved out? And then I get landed with a tax bill?
Is it still not your primary residence by virtue of the fact that you own no other?

I really want to move across the city but need to try and find out how much this would cost me in real terms before I actually do it.

Also, just another question, is mortgage interest relief impacted if you move out of your primary residence?

 

[ClubMan]

I suppose I'm just wondering does that mean I would be automatically reclassified from owner occupier to investor overnight?

Once it ceases to be your PPR and is rented out then it becomes an investment property with all that this entails (see the Property Investment FAQ and other posts for some background on this).

If I continued to keep my bedroom in my apartment i.e. just continue to rent the second room under the rent a room scheme then surely that would be okay

Not if you are not genuinly occupying the place as your PPR.

However, I was interested to see the increase in the RaRS to €10k.
Is there anyway I could rent my 2 bedrooms individually and avail of relief up to €10k under RaRS or would my claim be dismissed because I had moved out?

Yes - impossible.

And then I get landed with a tax bill?

Rental income is self assessed so you won't get a bill but you will have liabilities.

Is it still not your primary residence by virtue of the fact that you own no other?

No - not necessarily. Only if you are actually/genuinely living there.

Also, just another question, is mortgage interest relief impacted if you move out of your primary residence?

Yes - of course. It's owner occupier mortgage interest tax relief. So if you cease to be an OO then you no longer qualify and need to cancel this.

This post describes some of the possible implications of renting out a former PPR.

 

[colsku]

The moral of the story as far as I know is that in order to rent out a room under the rent a room scheme, you need to be living there, OR be deemed to be living there.

If you are being forced to move abroad or to another part of the country for employment reasons , you can live somewhere else and keep your apartment as your PPR, therefore still being able to avail of the rent a room scheme (i think! Can anyone advise?). I'm not sure this is applicable in your case however.

It looks as though you really do want to move apartments, so if you are determined to move it looks as though you'll have to give up your PPR status on the current apartment. This has pretty serious financial implications as Clubman so professionally pointed out in that link.

My advice - try your hardest to keep the current apartment as your PPR even if you dont plan living there, rent out one room and hope for the best!

Remember tax avoidance is diffreent to tax evasion!

 

[ClubMan]

My advice - try your hardest to keep the current apartment as your PPR even if you dont plan living there

How do you propose that they do this legitimately?

Remember tax avoidance is diffreent to tax evasion!

And not all tax avoidance is OK - Revenue have extensive anti-avoidance powers which render most or all transactions artifically structured mainly or solely to avoid tax as tantamount to evasion.