You still have to declare it on your tax return, even when no tax is due. It doesn't affect your mortgage or the tax-free sale of your home.
Quick facts
- Tax-free limit
- €14,000 a year, gross
- Taxes covered
- Income tax, PRSI and USC
- Over the limit
- All of it is taxed
- Short lets
- 28 days or less don't count
- Must declare
- Yes, on your return
- Backdate
- 4 years
The €14,000 cliff
"The income you receive must not exceed the exemption limit of €14,000." "If it does, then you are taxed on the total amount." The limit counts the gross rent plus any charges for meals, laundry or other services.
Revenue's own example: rent of €13,000 plus meals. "Mary's gross income from letting the room and providing ancillary services was €14,500." So Mary loses the relief entirely.
Who can't be the lodger
The relief doesn't cover rent from "your child or the child of your civil partner your employer or short-term guests (including those who book accommodation through online booking sites)."
"From 1 January 2019, the relief does not apply to income arising from letting periods which do not exceed 28 consecutive days." Students are the exception: "The relief can apply to lettings used as residential accommodation for students in an academic year or term." That includes Monday-to-Thursday digs.
The room must be in your home
The house must be your main residence, owned or rented. "If you qualify for Rent-a-Room Relief there will be no effect on Mortgage Interest Relief or Owner-Occupier Relief ." Your Capital Gains Tax exemption on selling your home is untouched too.
How to claim
"You must declare the rental income even when it is exempt from Income Tax because of Rent-a-Room Relief." PAYE workers use Form 12 in myAccount; the self-employed use Form 11 on ROS.
"There is a four-year time limit in which rent-a-room relief can be claimed." If you've been paying tax on lodger income that should have been exempt, you can claim it back. You can also opt out, if deducting expenses would leave you better off.
Common questions
How much can I earn tax-free with Rent-a-Room Relief?
Up to €14,000 a year in gross income, free of income tax, PRSI and USC.
What happens if I go over €14,000?
You are taxed on the total amount, not just the part above €14,000.
Can I use Rent-a-Room Relief for Airbnb?
No. It does not apply to short-term guests, including those booked through online booking sites, or lettings of 28 days or less.
Do I need to declare rent-a-room income?
Yes. You must declare it on your Income Tax Return even though it is exempt.
Does Rent-a-Room Relief cover students?
Yes. It can apply to lettings to students for an academic year or term, including four-day-a-week digs.