With the demand for student accommodation rising and with a shortage in private rented accommodations suitable for students, the Rent-A-Room relief scheme offers home owners the possibilities of earning a tax free income.
With the average rent nationwide at €888 per month, and with rents set significantly higher in Dublin, leasing a spare room at €500 a month over a nine months college term for 5 days a week could provide the same net income as €8,500 in gross salary for an average worker.
Aidan Clifford, Technical Director of ACCA Ireland said: “The Rent-A- Room relief is a good option for home owners with a spare room located near good transport routes. The annual tax free limit is €10,000, so an owner could rent two or three rooms before coming into the tax net. For an elderly person on the state pension, the rent could amount to half again of their pension. For others, this extra income could offset future household costs such as the water charge which is scheduled for next year.”
He continued, “Normal tax rules for renting out property are complex, issues such as registering with the Private Residential Tenancy Board (PRTB), pre-letting expenses, rent pooling, restrictions on interest relief, the special student accommodation property schemes, the restrictions on the types of expenses that can be claimed, wear and tear allowances, PRSI and income levies all need to be considered. Home owners availing of the Rent-A-Room scheme, means the householders does not have to register as a private landlord with the Private Residential Tenancy Board (PRTB) nor declare any of the income for tax purposes.”
Landlords could seek the advice of a local qualified chartered certified accountant, found at www.accaglobal.com for further support.
Notes to Editors
1. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
2. There are over 20,000 members and students in Ireland.
3. We support our 170,000 members and 436,000 students in 180 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 91 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.
4. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.
5. Q1 Daft Report Rental rate Q1 2014 http://www.daft.ie/news/2014/daft-rental-report-q1-2014.daft
6. Rules for Rent-A-Room:
• The home must be located in the State and must be the owner’s principal private residence during the year of assessment.
• The total (gross) rent, which includes sums that the tenant pays for food, utilities, laundry or similar goods and services, cannot exceed €10,000 in the tax year (1 January to 31 December)
• The income you get from renting out the room is not liable to PRSI, the Universal Social Charge or income tax. However, it must be included on the home owner’s annual income tax return.
• For more information is available on Revenue.ie and citizensinformation.ie: http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/rent_a_room_scheme.html
• Rent-A-Room release: http://www.revenue.ie/en/tax/it/leaflets/it70.html#section11
For reference contact:
Paddy Hughes / Luke McDonnell, Drury|Porter Novelli at: 01 260 5000
Aidan Clifford, Technical Director, ACCA Ireland at: 087 247 0205
Lisa Towell, Communications Officer, ACCA Ireland: 01 498 8904/087 961 5624