Rent-a-room relief

If you rent out a room or rooms in your sole or main residence as residential accommodation you may qualify for rent-a-room relief. This will mean that the rental income you earn will be exempt from income tax.

To be eligible you must:

• Only claim relief on income earned from occupants who use the room on a long term basis
• Not claim relief on income earned from short-term guest arrangements

(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 will need to separate this income and only declare the eligible income to Revenue for rent-a-room relief)

• Not earn more than €14,000 in rental income in the tax year
• Not deduct expenses from your rental income while claiming rent-a-room relief (it may be worth your while to opt out of the relief in a particular year in order to offset expenses against the rental income and avail of wear and tear allowances)

For example, Frank rents out a room in his home to Steve for two college semesters during the tax year. He earns €1,000 per month (excluding the summer months of June, July & August) in rental income – a total of €9,000. This income qualifies for rent a room relief and Frank will not have to pay income tax on the earnings.

During the summer months, Frank also rents out the room to tourists to earn some additional income. He earns €2,000 from these lettings. As this money was earned from short-term rentals, it does not qualify for rent-a-room relief and income tax will be due.