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Rent a Room Relief

  1. Overview
  2. What conditions must be met?
  3. How is relief granted?
  4. What type of residence qualifies?
  5. How does it affect other reliefs and taxes?

How is relief granted?

You must use the Revenue Online Service (ROS) to enter the amount of exempt income on your Form 11 if you are self-assessed. You must use myAccount to enter the amount of exempt income on your Form 12 if you pay tax through the Pay As You Earn (PAYE) system. You will then receive the relief due.

If you do not wish to receive this relief you can request to have the income taxed. You must request this in writing on or before your tax return's filing date.

There is a four year time limit to claim relief. This is important if you were paying tax all along on your rental income which should have been exempt.

  • Example 1

    John rents out a house that he occupies as his sole residence. He sub-let a room during 2015. His tenant paid him gross rent of €13,000.

    While the room was sub-let, John spent €1,500 on repairs to the room after fire damage.

    John cannot claim Rent a Room Relief for 2015 as his gross rental income exceeded the limit (€12,000) for that year.

    The €1,500 expenses cannot be taken into account for exemption limit purposes. The taxable rental income is €11,500 (€13,000 less €1,500 expenses).

  • Example 2

    Denise spent €15,000 on preparing a basement flat in her sole residence for letting. €10,000 of this qualifies for wear and tear allowances. 

    She let this flat for €750 per month for November and December 2014. She spent allowable expenses of €500 on letting and legal fees for this letting.

    She also received €20,000 gross rental income for another house she owns and spent allowable expenses of €1,000. These expenses did not relate to interest on borrowings used in the purchase, improvement or repair of the property.

    Her taxable income for 2014 is as follows:

    (a) with Rent a Room Relief
    DescriptionCalculation valuesTotals
    Salary  

    €65,000

    Rental income

    €20,000

    		  

    Less rental expenses

    (€1,000)

    		  

    Net rental income

    		  

    €19,000

    Total income for Income Tax, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) purposes

    		  

    €84,000
    (b) without Rent a Room Relief
    DescriptionCalculation valuesSub-totalsTotals
    Salary    

    €65,000

    Gross rents (Property 1)

    €20,000

    		    

    less rental expenses

    (€1,000)

    €19,000

    		  

    Gross rents (Property 2)

    €1,500

    		    

    Less rental expenses

    (€500)

    €1,000

    		  

    Less wear and tear allowances (€10,000 @ 12.5%)

    		  

    (€1,250)

     

    		  

    Net rental income

    		    

    €18,750

    Total income for Income Tax, PRSI and USC purposes

    		    

    €83,750

    Denise decides not to apply for Rent a Room Relief in 2014. Her rental income of €1,500 is taxable but she can use wear and tear allowances (€1,250) and expenses (€500).

    This creates a rental loss of €250 from the basement flat letting. She sets this against her taxable rental income from the other house.

    She received rents of €9,000 for the basement flat in 2015. Denise applies for Rent a Room Relief as she has a profit in 2015 from the flat and meets the requirements.

    The rental income from the other house is taxable for 2015.

 

Next: What type of residence qualifies?

Published: 18 October 2017 Print this page

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