216A Rent-a-room relief

Summary

This section affords relief from income tax for gross receipts of up to €14,000 per annum from the letting by an individual of a room or rooms in the individual’s sole or main residence. The relief is not due in certain circumstances including, for example, where the sums received are from a child to a parent or are from an employer to an employee. The granting of relief under the section does not affect the individual’s entitlement to mortgage interest relief or capital gains tax exemption on the disposal of that residence.

Details

Definitions

“qualifying residence” is a residential premises located in the State which is occupied by an individual as his or her sole or main residence during the year of assessment concerned;

“relevant sums” are sums received by an individual in respect of his or her qualifying residence for the use of a room or rooms in the residence as living accommodation and include sums received for meals, cleaning, laundry and similar goods and services which are incidentally provided in connection with that use;

“residential premises” means a building or part of a building used as a dwelling.

The relief

Where, in a year of assessment, an individual is chargeable to tax under Case IV or Case V of Schedule D in respect of relevant sums, regardless of whether the sums are derived from one or more sources, and the total amount of those sums does not exceed €14,000, then the profits/gains or losses of that year of assessment arising from those relevant sums are treated as being nil.

The total relevant sum is a gross figure, i.e., no account is taken of any expenses incurred in generating the relevant sums. Any capital allowances which could have been granted under section 284 are deemed to have been granted. In other words, there is a notional writing down of capital expenditure on furniture, etc., in respect of which wear and tear allowance would, but for this relief, have been granted.

Opting out of relief

An individual can make an election to opt out of this relief for a year of assessment. Such an election must be made on or before the return filing date for the year of assessment concerned.

Non-application of relief

“Rent-a-room” relief will not apply in circumstances where the relevant sums received in respect of accommodation provided in the family home are from a child to his/her parent, or from a child to the civil partner of his/her parent.

Relief will not apply to payments received either directly or indirectly by an individual, or by a person connected with the individual, in respect of accommodation provided in the family home where that individual is an office holder or employee of the person making the payment or of a person connected with the payer.

For the year of assessment 2019 and subsequent years, relief will not apply to that part of the relevant sums arising to an individual in respect of the use by a person of accommodation for a period which does not exceed 28 consecutive days;

except where the person using the accommodation—

1. is a person who is resident or ordinarily resident in the State and is incapacitated due to mental or physical infirmity (a “relevant person”),
2. uses the room or rooms for a minimum of 4 consecutive days per week for not less than 4 consecutive weeks, or
3. is receiving full-time or part-time instruction at a university, college, school or other educational establishment in the State.

(3B)

The person claiming that the exception applies may be required to provide supporting proof to the Revenue Commissioners.

(3C)

Tax returns

This section does not affect the obligation to make a return.

Limit

The threshold for the rent-a-room scheme is €14,000.

Apportionment

Where more than one individual is entitled to the relevant sums concerned, the €14,000 limit is divided equally between them.

Entitlement to other relief or exemption

The granting of relief under the section does not affect the individual’s entitlement to mortgage interest relief nor capital gains tax exemption on the disposal of that residence.

Relevant Date: Finance Act 2021