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Monday 5 December 2016

The 60-second guide to... the rent-a-room tax relief

Independent.ie newdesk

Published 06/11/2016 | 02:30

If you were paying attention during Budget 2016, you might have noted that the ceiling for income tax exemption under the rent a-room tax relief scheme is being increased from €12,000 to €14,000 from January 2017. This means that the total (gross) rent you get, including any contributions from your tenant to utilities, laundry, food or any other services, must not exceed €14,000 in the year from next year..

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But the scheme has been under the spotlight quite a bit over the past year or so because of the row over whether property owners who have a room to let could still get the tax relief on income generated by letting their rooms out on the short-term room sharing website Airbnb.The scheme is only for residential tenancies, not short-term guest arrangements, so the short answer is no, you can't. But you can note on your tax return form any expenses you incur in doing so as these can help reduce your tax bill, according to Taxback.com.

Other exclusions from the rent-a-room scheme include renting to your son or daughter (although not other family members), and renting to clients of your employer.

The room doesn't have to be self-contained, as in something like a converted garage or a basement flat, but if it is, you must register any tenancy with the Residential Tenancies Board and comply with some minimum rules and standards. But if the room is within your home, you won't need to register as a landlord although tenants will still have rights and entitlements, even if they are not as robust as for self-contained rooms. It's strongly recommended that you agree some ground rules in cases where you will be sharing the accommodation with your tenant, and put them in writing and have both of you sign them.

It's also worth noting that you don't have to be the owner of the property to avail of the scheme. You can be a tenant and sub-let to someone else, but only with the agreement of your landlord.

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