Rent out rooms about 7,620 - still PPR?

J

johnfitz

Guest
Hi,

I have read some similar queries to mine but have not been able to confirm the following. Maybe some of you can help.

I live in a four bedroom house and rent out two of these at the moment. I earn below 7,620 per year so I am eligible for the Rent A Room Scheme. My question is if I rent out the remaining room, I could potentially be getting 1,100 per month altogether. This would invalidate the Rent A Room Scheme as I understand and will mean that all my rental income will be liable for tax. This part of it is fine.

However, as the house would still be my PPR, would I continue to enjoy the benefits of this such as CGT exemption, no stamp duty payback, mortgage interest relief at a higher rate for the first seven years for FTB, etc. as before?

Thanks in advance,
John
 
johnfitz said:
However, as the house would still be my PPR, would I continue to enjoy the benefits of this such as CGT exemption, no stamp duty payback, mortgage interest relief at a higher rate for the first seven years for FTB, etc. as before?
Click to expand...
I suspect not. I'm pretty sure that at least CGT and SD clawback become an issue in this case. However best to get confirmation.
 
I think in relation to CGT & mortgage interest relief, these would be assessed based on how much of the house you occupy.
i.e if you rent out 3 rooms, then you will only be occupying 25% of the house, therefore the remaining 75% would be liable - your accountant would be the best person to discuss your options with.

-soc
 
Thanks for the information. I will check it out with my accountant.

Is it true that I could put the house on the market in the next few months and rent it out in its entirety until I sell it without CGT liability? I seem to remember something about the last year of ownership been exempt?

Thanks.
 
As far as CGT is concerned, I think the matter is whether or not the house is your principal private residence or not`is the first question. The second relates to what the Revenue call partial relief:

(Extracted from Revenues own guide)
Partial Relief
 Full exemption may not be due if only part of the house has been used as the individual’s residence, in which case an apportionment is made to arrive at the exempt portion of the total gain. This may happen where the house is used partly for business purposes or where rooms in the house have been
let.

SO for whats its worth - it is may be worth structuring your Rent-A-Room so that you stay under the limits. As there is no CGT implications on that.
 
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