In the current housing crisis, people are encouraged to consider letting out rooms in their houses, where they have capacity.

The Rent-a-Room Relief scheme aims to incentivise householders to consider this option.

What is Rent-a-Room Relief?

The Rent-a-Room Relief lets you earn up to €14,000 per year tax-free if you rent out a room (or rooms) in your home to private tenants. A self-contained unit, such as a basement flat or a converted garage attached to your home, can qualify for this relief.
While renting out a room that is part of your home is not covered by landlord and tenant law, renting out a self-contained unit is covered. Depending on their circumstances, your tenant(s) may qualify for the Housing Assistance Payment (HAP). In certain circumstances, a tenant can claim Rent Supplement.

What are the qualifying conditions for the scheme?

For you to qualify for Rent-a-Room Relief, your home must be located in the State and you must occupy it as your sole residence during the year of assessment. This means that it is your home for the greater part of the year and is where people would normally expect to make contact with you. In most cases, you do not have to own the property – you could be a tenant and be sub-letting to someone else (in these cases, you should check with your landlord that sub-letting is allowed). However, if you are renting to a HAP tenant you must own the property and provide proof of ownership.
Currently, the total (gross) rent that you get, which includes any money that the tenant pays for food, utilities, laundry or similar goods and services, cannot exceed €14,000 in the tax year (1 January to 31 December). You cannot deduct expenses from your rental income while claiming Rent-a-Room Relief.
If you qualify for Rent-a-Room Relief, the income you get from renting out the room will be exempt from PRSI, the Universal Social Charge or income tax. However, it must be included on your annual income tax return.

What are the exclusions from Rent-a-Room Relief?

You will not qualify for the relief if:
Your gross income from rent and related services is over €14,000. In this case, Revenue will treat the full rental income minus allowable expenses as part of your total income for tax purposes and this should be included in your tax return.
You are renting the room in your home to your civil partner, son or daughter (but there is no restriction in the case of other family members). You are an employee or office-holder in a company, and the company pays you to allow clients to use the room in your home on an occasional basis. You are renting the room to short-term guests, for example, through an online accommodation booking site.

How would rental income impact on Social Welfare payments?

If you are getting a means-tested weekly social assistance payment, Supplementary Welfare Allowance or Working Family Payment from the Department of Social Protection, you can get up to €269.23 a week (€14,000 per year) for renting out a room in your own home without it affecting your Social Welfare payment. You should check if renting a room in your home will affect any other payments you are getting such as Fuel Allowance. This does not apply to short-term lettings (of less than 28 consecutive days). It also does not apply if you are renting a room to your employee or to an immediate family member.

If I avail of the scheme, do I have to register with the Residential Tenancies Board (RTB)?

If you rent out a self-contained unit in your home, such as a converted garage attached to your home or a basement flat, the rights and obligations under residential tenancies legislation apply to you. For example, you are obliged to register the tenancy with the Residential Tenancies Board (RTB), provide a rent book to the tenant and ensure that the accommodation provided meets minimum physical standards.
Residential tenancies legislation provides for security of tenure for tenants. These provisions are in Part 4 of the Residential Tenancies Act 2004. However, if the self-contained flat or apartment was originally part of the main house, you can choose to opt out of these provisions. You must give the tenant notice in writing, before the start of the tenancy, if you wish to take this option.
If the part of your home that you rent out is not self-contained, you are not covered by landlord and tenant legislation, so the rights and obligations under that legislation do not apply to you. However, if you are renting to a HAP tenant the accommodation must meet minimum standards.
This also means that private tenants living in your home are living under a licensee agreement, not a tenancy agreement, and are really only entitled to reasonable notice if you choose to terminate the agreement.

How to apply for the scheme?

To claim Rent-a-Room Relief you must record your rental income when making your annual tax return.

You can complete and submit your tax return form online using:

Revenue's myAccount Service if you are a PAYE taxpayer (Form 12).
Revenue Online Service (ROS) if you are self-employed or a PAYE taxpayer with other sources of income (Form 11).
Alternatively, you can complete a hard-copy annual tax return. You record your rental income for Rent-a-Room Relief in the ‘Exempt Income’ section of your tax return form and return the completed form to your local tax office.
The tax office can answer any queries you may have and will help if you have any difficulties completing the form.

Call a member of the local Citizens Information team on 0818 07 7860, the offices are staffed from Monday to Friday from 10am to 4pm. Alternatively you can email tralee@citinfo.ie or log on to www.citizensinformation.ie for further information.