Renting a room in my house - tax limit

J

jenolan

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HI,

Can anyone tell me what the limit is for renting a room in your house without having to declare it?

Thanks
 
With effect from 6 April 2001, if you rent a room (or rooms) in your principal private residence to private tenants during the relevant tax year, the rental income you earn will be exempt from income tax, provided this income does not exceed 7,620 euro or (5,587 euro for the "short" tax year 2001). This is called the "Rent a room" scheme. Where more than one individual is entitled to benefit from the rent (i.e., you and your spouse, etc.), the limit of 7,620 euro is divided between the individuals concerned. Tenants who rent out a room(s) in your home are entitled to claim tax relief on rent paid.
 
Just to add to that - I think that you still have to declare such income but as long as the rent a room income is €7,620 or less then there is no tax liability. If you exceed that amount then the full amount (and not just the excess) is assessable for tax and your home becomes classed as a normal rental investment property which has implications for stamp duty, CGT etc.
 
No, exceeding the 7,620 doesn't have any CGT or stamp duty implications. No CGT because it is still your PPR, no stamp duty because there is no monetary limit in the stamp duty legislation on how much rent you can receive without suffering a clawback (though everyone assumes there is a 7,620 limit). The 7,620 limit is only in income tax legislation.
 
I don't think that this is true. If you exceed the €7,620 limit then the house is treated as an investment property even if it is still also your PPR. If this happens within five years of purchase as an owner occupier then a stamp duty clawback applies, part of any gain arising from the eventual resale will be assessable for CGT, the rental income is assessable income tax as normal and owner occupier mortgage interest relief no longer applies although 100% of mortgage interest and other allowable costs can be set against rental income. That is my understanding anyway. Perhaps somebody else with more expertise in this area can comment?
 
Clubman, thanks for the inference that I don't have the expertise.

This post has gone through about 10 changes in the last half hour so if you've been watching you will see the tone has changed.

On a review of the CGT, I guess it could be argued that S604(7) of the Taxes Consolidation Act catches you for renting out some of the property and S216A gets you out again if renting under rent a room, so I accept I was wrong on the CGT front.

On the stamp duty, although it is widely perceived that the 7,620 limit applies for the stamp duty clawback as well, it doesn't. Read the legislation.
 
DarraghDuane said:
Clubman, thanks for the inference that I don't have the expertise.
Click to expand...
That was not the inference - I meant with more expertise than me. :rolleyes:
 
do this mean if a person buys a house, decides to rent it at some stage (getting more than 7600 per annum) and then after a number of years begins to live in it again, (because it was for a period seen as a rental property) if they sell it one to move home, they have to pay GCT. even though it was their only property.


will it ever been seen as a Principle Private Residence again?
 
Yes - as an example, say a house was owned for 12 years, was a PPR for the first 2 years, then rented for 4 and then a PPR again for the last 6 then (approximately) (4 - 1) / 12 = 25% of any gain would be assessable for CGT (the first year after vacating it as a PPR and renting it is not assessable as far as I know). There are many other threads dealing with this issue in more detail elsewhere.
 
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