Most of the public debate on Rent-a-Room tax relief has focused recently on Airbnb.  The online lettings agency has called on its 9,000 Irish Airbnb hosts to challenge Revenue Commissioners guidelines that they can’t claim tax relief on bed-and-breakfast income. But, Revenue say the scheme is aimed at residential accommodation, not short-term.

Whether the challenge goes ahead or not, it’s worth looking at what the Revenue rules say on Rent-a-Room tax relief. It would appear to be spelled out quite clearly below:

“The room or rooms must be used for the purposes of residential accommodation, i.e. the occupant is using the room, either on its own or in conjunction with other parts of the residence, as a home. The relief does not apply to rooms that are used for the provision of accommodation to occasional visitors for short periods,  including, for example, where the accommodation is provided through online accommodation booking sites.”

If you’re unsure whether you qualify for the scheme, register for our Startup Webinar where a chartered accountant will answer your questions.

How The Rent-A-Room Tax Relief Scheme Works

  1. If the gross amounts you receive from rental income doesn’t exceed the current limit (€14,000 per annum from 1 January 2017), then the profits or losses on the relevant sums are treated as nil for income tax purposes.
  2. Please note that rental income does not just include rent, it also includes food expenses, laundry or similar goods and services.
  3. Profits are disregarded for income tax, PRSI and USC purposes and losses cannot be offset against rental profits from other lettings.
  4. However, where the gross income from rent-a-room lettings exceeds the exemption limit, the profits for the year in question are computed by reference to the gross income, not just on the amount by which that income exceeds the exemption limit.
  5. That relief doesn’t apply to payments for accommodation in the family home by your child or your civil partner’s child, regardless of whether or not the child has claimed tax relief on the rent paid. There is no restriction where rent is paid by other family members, for example, nieces and nephews.
  6. Neither does it apply to payments from your employer in respect of accommodation provided by you in your family home, for individuals visiting the employer for work related or training trips.
  7. The relief does not affect your entitlement to mortgage interest relief nor capital gains tax exemption on the disposal of your residence.
  8. Finally, if you claim relief you must provide details of the relevant sums on your annual tax return, notwithstanding that the profits or losses from the letting(s) are disregarded for income tax purposes.

Learn more about tax relief schemes during our Startup Webinar. If you have questions or some additional queries regarding Rent-A-Room Tax Relief, let us know by calling us on (01) 905 9364 or by emailing us at hello@accountantonline.ie.

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