Buyers Broker Ltd., on behalf of property buyers nationwide, is urging the Minister for Finance to leave the rent a room scheme untouched in the forthcoming budget.
Many of our first-time buyers are planning to supplement their income and mitigate the expenses associated with the purchase by renting out a room for a year or two.
Under the scheme, buyers can rent out the spare room(s) to generate up to €10,000 rental income per year tax-free. This income is not subject to the income levy; however, we are waiting to see if it will be affected by the December budget. We have requested early clarification of this and will circulate news updates as soon as we have them.
The rules of the scheme are quite strict in that there can be no additional charges for extras so the agreed rent must include all facilities provided for example; laundry, heat, electricity, internet access and/or cable television.
The income earned through this scheme has no impact on the homeowners tax liability on selling on their home (Capital Acquisitions Tax) or most interestingly, it will not affect any entitlements to social welfare.
Any person intending to avail of this scheme is statutorily obliged to file an annual tax return prior to finding a tenant.
As renting a room is relatively informal, I would always advise that a rent book (available for approx. €2 in most book/stationary shops nationwide) is used to record the value and payment of rent, notice period and any conditions of renting.
If you are considering renting out your spare room and are unsure in any respects, email your queries to firstname.lastname@example.org or telephone 01 4428 035.