If I rent a room in my residence is the income exempt from taxes?
Tax Professional Answers
Thank you very much for your query.
Although you haven't given very much information, can I assume you're referring to the Rent-a-Room Relief?
Where an individual lets a room (or indeed more than one room) in his/her home (i.e. main or sole residence), as residential accommodation, then the rental income may be received exempt from Tax where:
1. the aggregate of the gross rents received plus
2. Any sums for utilities, meals and/or other services supplied as part of the letting
are below the threshold amount of €10,000 per annum.
There are a number of conditions that must be satisfied in order to avail of this exemption from Income Tax, PRSI and Universal Social Charge:
1. An individual cannot avail of Rent-a-Room Relief in respect of payments for accommodation in the family home by a child of the individual regardless of whether or not the child has claimed tax relief on the rent paid.
2. There is no restriction in the case of nieces, nephews or other family members.
3. In order to claim the relief you must provide details of the relevant sums in your annual tax return.
4. If your gross income exceeds €10,000 then the entire amount of rental income received will be liable to Income Tax, Universal Social Charge and PRSI with relief for allowable rental expenses incurred.
5. The Rent-a-Room Relief does not apply to payments received directly or indirectly in situations where an individual receives payments from his/her employer in respect of accommodation provided by the individual in his/her family home for individuals visiting the employer for work related trips.
The Rent-a-Room Relief does not affect your entitlement to Mortgage Interest Relief.
The Rent-a-Room Relief does not affect your entitlement to Principal Private Residence Relief from Capital Gains Tax on the disposal of your residence.
I hope that has clarified matters for you.
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