Rent-a-Room Relief

Rent-a-Room Relief allows homeowners to earn tax-exempt rental income from private tenants. By renting out a room in your house you can earn tax-free income as long as it doesn’t exceed €14,000 in a tax year (the limit was €12,000 in 2016 and 2015 and €10,000 in 2014 and previous years).

A self-contained unit, such as a basement flat or a converted garage attached to your home can also qualify for this relief.

To qualify for rent-a-room relief:

• Your home must be located in the state

• You must occupy it as your sole residence during the year of assessment (it’s your home for the greater part of the year)

• You don’t need to own the property – you could be a tenant and be subletting to someone else (you may need to check if your landlord allows sub-letting)

You will not qualify for the relief if:

• Your gross income from rent and related services is over €14,000 

• You’re renting the room in your home to your son or daughter (there’s no restriction in the case of other family members)

• You’re an employee or office-holder in a company and the company pays you to allow clients to use the room in your home on an occasional basis

• You rent the room to short-term guests

You can't claim relief against income received for the use of the room(s) from:

• Your child or civil partner
• an employer
• an employee
• short-term guests, including those who book accommodation through online booking sites

If you qualify for rent-a-room relief, the income you get from renting out the room is not liable to PRSI, the Universal Social Charge or income tax. 

You can use the Revenue Online Service to enter the amount of exempt income on your Form 11 if you're 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'll then receive the relief due.

There's a 4-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.

What type of residence qualifies?

Sole or main residence

Your main residence is your home for most of the year and where friends would expect to find you. You don't have to own the property to claim the relief. The room or rooms must be in a residential property that is located in Ireland and it must be your main residence during the tax year.

Self-contained unit

The rented room/rooms can be a self-contained unit within the house, such as a basement flat or a converted garage. If this unit isn't attached to the property it won't qualify for the relief.

Business use or guest accommodation

Your tenants must use the room on a long-term basis. You can't claim relief on rooms that are used for business purposes.

Short-term stays provided through bed and breakfasts, a guesthouse or online booking sites don't qualify for relief.

Why you might opt out of rent-a-room relief

You can’t deduct expenses from your rental income while claiming rent-a-room relief. However, depending on the circumstances, it might be worth your while to opt out of in a particular year to offset expenses against rental income and avail of wear and tear allowances.

To opt out of the rent-a-room relief in a particular tax year, you must notify Revenue in writing, on or before the return filing date for that tax year. If you make an annual tax return, you can opt out by marking the relevant box in the ‘Exempt Income’ section of the return, otherwise, you can write to your tax district to say you don’t wish the relief to apply.

You can contact us at info@taxback.com to discuss if it's better for you to opt out.

What lets qualify for relief?

The relief applies only to residential tenancies and not to short-term guest arrangements. So for example, you’ll be covered if you’re renting a room to a student for the academic year or for a one-month course. But taking in guests for a short break won’t qualify, such as letting out a room on Airbnb for a week.

If you normally rent out the room for the academic year and you rent it out for short breaks during the summer as well, you must identify the income you get from the short rentals separately from the income that qualifies for rent-a-room relief when making your tax return to Revenue.