Rent a Room Tax Limit

L

Louise

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Hi

I'm a FTB and want to rent out my spare room under the rent-a-room scheme. According to the Revenue website, if I charge more than €7,620 per year, all of the rent is subject to income tax. However, if I go above this limit is there also a stamp duty clawback or is the limit for the clawback higher?

Thanks
Louise
 
The clawback is only if you rent out the entire apartment AFAIK. You'll be liable to income tax though. If you pay at the higher rate, it might be worth considering cutting the rent to stay in line with the rent a room scheme. For example if you charge 8K a year and pay 42% tax, you'd be better to charge circa 7K and pay no tax. Crunch some numbers.
 
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Again, not 100% on this, but reading revenue docs on it, it clearly states that "any rent other than RaRS" requires SD clawback.

Should the rent slip over the threshold, I'd doubt it would be RaRS and assume that the clawback would apply.
 
It's not really clear.

The Rent a Room Scheme is outlined .

The €7,620 is an income tax exempt threshold, I don't know if this has any impact on stamp duty.

My interpretation of the rules on OASIS is that you no longer are availaing of the Rent a Room Scheme when you no longer occupy the property.

The rent charged is irrelevant for stamp duty purposes.

This is my own interpretation.
 
CCOVICH said:
My interpretation of the rules on OASIS is that you no longer are availaing of the Rent a Room Scheme when you no longer occupy the property.
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Even if you still live there once the income exceeds the €7,620 threshold the RaRS is irrelevant and you are a rental property investor. I agree that the SD threshold issue in this situation is not clear though. Not sure what it means for CGT either since the propery is now a dual rental investment property and a PPR. Ultimately, if the rental income is only marginally above €7,620 then it might make more sense to reduce the rent to the threshold and avail of the RaRS.
 
ClubMan said:
Are you sure about that? I don't know the answer myself but would be careful about assuming that no SD clawback applies.
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That's my understanding of it. If this was not the case then a huge sector would be in trouble e.g. householders renting to students etc. In the above case the OP is still using the place as a PPR. Renting a room, at whatever cost, surely can't negate this?
 
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ClubMan said:
Even if you still live there once the income exceeds the €7,620 threshold the RaRS is irrelevant and you are a rental property investor.
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Is it not the case that rental income over and above the threshold is liable for tax, but the first €7,620 is still exempt?

The total (gross) rent you receive (which includes sums the tenant pays for food, laundry or similar goods and services) cannot exceed 7,620 euro (or 5,587 euro for tax year 2001). If you receive rental income over and above this amount, you are then liable for tax at the standard rate.

Rental income achieved from renting a room(s) in your home is exempt from tax up to a maximum limit of 7,620 euro
 
CCOVICH said:
Is it not the case that rental income over and above the threshold is liable for tax, but the first €7,620 is still exempt?
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Definitely not.
The total (gross) rent you receive (which includes sums the tenant pays for food, laundry or similar goods and services) cannot exceed 7,620 euro (or 5,587 euro for tax year 2001). If you receive rental income over and above this amount, you are then liable for tax at the standard rate.

Rental income achieved from renting a room(s) in your home is exempt from tax up to a maximum limit of 7,620 euro
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The quote could be a bit more explicit but the net effect is that income up to €7,620 is tax free but above that then the RaRS no longer applies and all rental income is assessable for income tax as normal.
 
Sorry - I edited my post to correct the "wrong" comment. The quote is correct but does not mean that only income over the €7,620 limit is taxable.
 
From this [broken link removed](in relation to clawback of stamp duty)

Under the rent-a-room scheme the
purchaser or the person in right of
the purchaser must continue to
occupy the property as his principal
place of residence while deriving rent
from the letting of part of the
property.​

So it certainly appears that the amount of rent charged is not relevant for stamp duty purposes.​

The briefing in question has more to say on the Rent a Room Scheme/Relief​

The total amounts
received cannot exceed £6,000 per
annum (£4,440 for the year 2001).​


(My emphasis)​


Does the letting of an entire

house qualify?

No. We have been asked for a view
on situations where a house owner
lets an entire house. The relief
applies to the letting of a room or
rooms in a “qualifying residence”. It
does not apply to the letting of an
entire residence. Also, the residence
must be occupied by the person
receiving the rent as his or her sole or
main residence. Where an entire
house is let, this condition is not
satisfied.​


​

 
Well to me, it appears that there is no stamp duty clawback if an owner occupier rents a room in his/her house for a greater amount than the RaR allowance. It also clears up the situation where (asked by many on AAM) an owner rents rooms in his PPR, but lives down in Wexford with Mammy and still feels the house in Dublin is his PPR as long as he charges 7620 per annum. This is not the case and s/he must pay the clawback. Am I right??
 
liteweight said:
Well to me, it appears that there is no stamp duty clawback if an owner occupier rents a room in his/her house for a greater amount than the RaR allowance.
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I'm still not sure that this is proven by the above.
It also clears up the situation where (asked by many on AAM) an owner rents rooms in his PPR, but lives down in Wexford with Mammy and still feels the house in Dublin is his PPR as long as he charges 7620 per annum. This is not the case and s/he must pay the clawback. Am I right??
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Yes - if the individual is not living there then it's not their PPR so thay can't avail of the RaRS. If they bought the property as a PPR originally and rent it out then a clawback of SD definitely applies.
 
I can't supply the link but if you click on CCOVCH's Revenue link above.....page 19 of 32 clearly states that when a person rents, other than under the Rent a Room Scheme, there will be a clawback of stamp duty. By implication there is no clawback if you operate under the scheme.

When you read the guidelines on the Rent a Room Scheme, it doesn't put a limit on the rental amount, it only stipulates that if rent is 7620 it will be tax free.
 
I wouldn't assume that anything has been cleared up to be honest.

It appears that you can charge rent in excess of €7,620 and not be liable for Stamp Duty clawback, bit that is only an interpretation on my part.

The OASIS info I linked/quoted before seems confusing/incomplete to me, but the Revenue briefing clarifies matters wrt to the income tax treatment of rent in excess of €7,620 (but I think I was the only one confused on that score).
 
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