Charlie Weston: Taking in a student could provide useful extra income and the tax relief is generous
People who have a spare room in their home, and who live near a college or university, have been encouraged to rent it out to students. There is generous tax relief available for renting out a room, but despite this the take-up of the scheme has been poor.
Student unions have appealed to homeowners to consider the option as rental costs have hit a new high and there are fewer than 3,000 homes available nationwide to rent, the lowest figure on record.
Sending a child to college is not cheap. For parents whose children cannot live at home while attending college, the annual cost has been calculated at €10,000, according to research carried out by insurance and investment firm Aviva. A big chunk of that cost is made up of rental expenses.
Just 2,500 students were accommodated by the renting of spare rooms last year. This is a direct result of the Union of Students in Ireland campaign promoting the option. A target of 4,000 students in digs accommodation has been set for 2019.
If you are renting a room or a number of rooms in your own home, you are entitled to something called rent-a-room relief.
This means that you are exempt from paying tax on the rental income you earn, as long as it is not more than €14,000 a year. This works out at €1,166 a month.
And you do not have to register as a landlord. This means the agreement you enter into with anyone renting will be less formal than it would be under landlord and tenant legislation, according to Taxback.com.
This makes renting out a room in your property a lot less bureaucratic and formal than it would be otherwise.
You don't have to provide your tenants with a rent book or register the tenancy, and if it doesn't work out you can terminate the tenancy at your own discretion.
You must be living in the home and it must be your principal residence.
If the homeowner gets more in rent than €14,000 in the tax year - such as extra charges for the likes of meals or washing clothes - then the homeowner may be liable for tax on the full amount. The scheme is different to income from Airbnb, which is taxable.
Despite the tax relief for the scheme, take-up is low, according to the student unions in Trinity College Dublin and UCD.
Negative stereotypes on both sides are being blamed for this. Homeowners are afraid students will stay up late and party hard. Students fear being restricted in what they can do in someone else's home.
But it is a worth considering for homeowners. The extra income could be very useful for put-upon householders.
Sunday Indo Business