Revenue Tax Briefing

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Revenue Tax Briefing Issue 44, June 2001

Rent-a Room Relief - Topical Questions

The following Questions and Answers address a number of queries in relation to the new relief.

When does the relief apply?

Rent-a-room relief applies where an individual receives sums in respect of the use, for residential purposes, of a room or rooms in the individual’s sole or main residence. The sums received may include payment for meals, cleaning, laundry and other similar services. The total amounts received cannot exceed ₤6,000 per annum (₤4,440 for the year 2001). Where more than one individual receives such sums in respect of a “qualifying residence” the limit of ₤6,000 is divided between the individuals concerned.

What is a “Sole or Main Residence”?

The “qualifying residence” must be part of the individual’s sole or main residence.

Whether a property is the sole or main residence of an individual is a question of fact. In general, a property will be an individual’s sole or main residence if it is the individual’s home and it is the place where friends and correspondents would expect to find him/her. The residence does not have to be owned by the individual, for example, it could be rented accommodation.

Does rent from a self-contained unit qualify for the relief question

Yes. A “qualifying residence” for a year of assessment is a residential premises situated within the State which is occupied by the individual as his/her sole or main residence during the year of assessment. A “qualifying residence” includes a self contained flat where that flat is part of the sole or main residence of the individual e.g. a basement flat, a converted garage which is attached to a house. The self-contained unit must be in use for residential purposes.

Is the income that qualifies for relief liable for PRSI and Health Levy?

No. Where the relief applies the profits/gains are nil for income tax purposes and accordingly the income is not liable for PRSI or the Health Levy.

Does the letting of an entire house qualify?

No. We have been asked for a view on situations where a house owner lets an entire house. The relief applies to the letting of a room or rooms in a “qualifying residence”. It does not apply to the letting of an entire residence. Also, the residence must be occupied by the person receiving the rent as his or her sole or main residence. Where an entire house is let, this condition is not satisfied.

Does the income have to be included in a tax return?

Yes. Where an individual is in receipt of such income it must be included in the individual’s tax return.

Can rent allowance be claimed by a tenant where the relief applies?

Section 473 Taxes Consolidation Act, 1997 provides relief for rent paid by an individual in respect of residential premises which is the main residence of the individual. Rent includes any periodical payment in the nature of rent but excludes a payment or part of a payment where:

  • it is paid for the maintenance or repair of the premises for which the tenant would generally be liable
  • it relates to the provision of goods or services
  • it relates to any right or benefit other than the bare right to use, occupy and enjoy the premises, or
  • any part of the rent is recoverable by the tenant.

Whether a payment is rent within the meaning of section 473 depends on the facts of each case. Where the facts and circumstances are such that Section 473 applies the rent allowance may be claimed. In the case of payments made by children in respect of the family home it is Revenue’s view that, in general, such payments are not rent within the meaning of section 473.