I get Rent a Room Relief although I live in an attached property which I don't own.

[Johnnyinthesky]

Extracted from a separate thread

Do you own any investment or other property? Yes. An adjoining apartment which we let under rent a room for €1100 per month. Good area so rent will be stable.

 

[Johnnyinthesky]

Hi
So the house is comprised of main building and small apartment attached. We used to live in the apartment and moved to main building. Her parents moved to another restored building. Mortgage on the apartment. Main house is her parents which will be left in will.

 

[Brendan Burgess]

Yes. An adjoining apartment which we let under rent a room for €1100 per month.

Your first priority is to investigate this:

Are you sure it qualifies for Rent a Room scheme

Self-contained unit​

The rented room or rooms can be a self-contained unit within the house, such as a basement flat or a converted garage.

If this unit is not attached to the property it cannot qualify for the relief.

If you own it separately from the main house which seems to be owned by her parents, then I very much doubt it qualifies for Rent a Room relief.

Brendan

 

[huskerdu]

In your OP, you put the value of your home as €1M but you dont own this so its not an asset.
Whats the value of the apartment that you own and has a 140K mortgage.

If you are not living in the apartment and are renting out it, how is the rent a room relevant, Surely this is standard rent which is subject to income tax ?

 

[Johnnyinthesky]

On Rent A Room -yes it does qualify and I have checked this with revenue. It is attached to and was part of the main house so therefore qualifying.
I also checked if we can rent it out even though we are not the owners of the main house and we can provided in laws allow which they do.
The rent for the apartment at market rate would be only marginally higher (I checked with the letting agent today - we could get €1200 a month) but we would pay tax on it (but maybe not muxch as we are low earners). So not much point switching off rent a room while we qualify. Currently the rent a room rent is €1100 a month.

 

[Brendan Burgess]

On Rent A Room -yes it does qualify and I have checked this with revenue. It is attached to and was part of the main house so therefore qualifying.
I also checked if we can rent it out even though we are not the owners of the main house and we can provided in laws allow which they do.

Have you this in writing from Revenue?

I am really surprised that you can own an apartment and someone else can own the house attached to it, and you can get rent a room relief.

 

[Johnnyinthesky]

You don't need to have access to it. Just be the beneficiary. This is for the OP's minor children - it's very common to use a bare trust in this scenario (I have one for my own children).

I thought so too. I think this is what is done. It is earmarked for college I think.

Have you this in writing from Revenue?

I am really surprised that you can own an apartment and someone else can own the house attached to it, and you can get rent a room relief.

Revenue dont put anything about rent a room in writing. They do get you to sign a declaration though and I assume check it against PPS & tax. Yes there is nothing in the guidelines to say you can't. If we are living in the house ( at a long term cost to tax liability) then we can rent the apartment.

Have you this in writing from Revenue?

I am really surprised that you can own an apartment and someone else can own the house attached to it, and you can get rent a room relief.

'For you to qualify for rent-a room relief, your home must be located in the State and you must occupy it as your sole residence during the year of assessment. This means that it is your home for the greater part of the year and is where people would normally expect to make contact with you. In most cases, you do not have to own the property – you could be a tenant and be sub-letting to someone else'

 

[_OkGo_]

I do think the rent a room is valid but if it is not then I need to replace that income through salary

From what you have said so far, it sounds like you are incorrectly claiming the rent-a-room relief and you have not had it confirmed by revenue. You don't have it in writing so it was verbal. Your verbal description to revenue may not have described the property correctly so they may have said yes based on incorrect information supplied.

For the property to be gifted to your spouse, it must have it's own title/deeds, is this correct? If so, they are 2 independent properties that happen to be attached, much like any semi-D and would not qualify for the rent-a-room relief. I would be getting this double and triple checked by someone competent who can tell you if it is a self-contained unit or not. More than likely an engineer or architect familiar with planning regulations and not an estate agent. You could be facing years of unpaid tax if your don't correct it now

 

[Johnnyinthesky]

From what you have said so far, it sounds like you are incorrectly claiming the rent-a-room relief and you have not had it confirmed by revenue. You don't have it in writing so it was verbal. Your verbal description to revenue may not have described the property correctly so they may have said yes based on incorrect information supplied.

For the property to be gifted to your spouse, it must have it's own title/deeds, is this correct? If so, they are 2 independent properties that happen to be attached, much like any semi-D and would not qualify for the rent-a-room relief. I would be getting this double and triple checked by someone competent who can tell you if it is a self-contained unit or not. More than likely an engineer or architect familiar with planning regulations and not an estate agent. You could be facing years of unpaid tax if your don't correct it now

No I think its correct. Revenue don't issue a yes or a no as they dont visit the site. They do get a declaration and check I assume against deeds & mortgage. Its declared on your tax return and they can see that. You can also opt out and in in a yearly basis if you wish - so if I wanted to refurbish & claim costs which I cant do under rent a room I can do so under normal rent rules (assuming tenants were OK with this of course)
Property has its own map, title deeds.
The key thing is that the property was originally part of the main house - this is critical. The doorway into it is still there and was blocked to break the property but it was and still could return to the main house if required.

"If you rent out a self-contained unit in your home, such as a converted garage attached to your home or a basement flat, the rights and obligations under residential tenancies legislation apply to you. For example, you are obliged to register the tenancy with the Residential Tenancies Board (RTB), provide a rent book to the tenant and ensure that the accommodation provided meets minimum physical standards.

The residential tenancies legislation provides for security of tenure for tenants. These provisions are in Part 4 of the Residential Tenancies Act 2004. However, if the self-contained flat or apartment was originally part of the main house, you can choose to opt out of these provisions. This option is available under Section 25 of the Act. You must give the tenant notice in writing, before the start of the tenancy, if you wish to take this option"

 

[_OkGo_]

Do I Qualify for Rent-a-Room tax relief? Accountant Online

Do I qualify for Rent-a-Room tax relief? The rooms must be used for residential not holiday accommodation. Here's how the scheme works:

accountantonline.ie

Self-contained unit​

You cannot claim this relief if you let the whole property. This relief is conditional on you being a resident in the same property as your tenant, who is giving you rent. On the other hand, the property can have a self-contained unit, such as a garage, or basement flat. The unit needs to be attached to the main property building. If it is not attached, you cannot claim this relief.

We can agree to disagree but I think you are misinterpreting and putting too much emphasis on the 'attached to your home' bit. That is only one criteria but not the main or only criteria. It just stops people converting standalone garages.

You are renting an entire property using rent-a-room and you live next door. It is not a self-contained unit within your property. You do not live in the same property just because it once had a connecting door. The declarations and submissions you are making to revenue are 'self-assessed' so they don't necessarily check anything until there is a problem.

Ultimately it's your decision but I would be getting a second opinion before continuing what you are doing with the rental

 

[Johnnyinthesky]

'You are renting an entire property using rent-a-room and you live next door. It is not a self-contained unit within your property'

It does not have to be self contained within (see basement flat reference). You can rent a room in your house or an attached building once it was attached. Thats the case. You dont even have to own the building to rent it out.

 

[NoRegretsCoyote]

They do get a declaration and check I assume against deeds & mortgage.

There are tens of thousands of rent-a-room declarations a year. Revenue do not check against deeds or collect mortgage details from banks. Even if they did collect and analyse this data it wouldn't tell them whether the property in question is compliant as people make alterations and renovations all the time.

The burden is on you - the self-assessed taxpayer - to ensure compliance with the law.

The property you are letting is not part of your residence, and it is not connected to it. It is not a self-contained basement or garage either. You can read the rules here. My reading is that you don't qualify for rent-a-room relief.

 

[Johnnyinthesky]

We shall have to differ. My accountant says it is. The other people who I know in rent a room have exactly the same scenario. Attached but seperate.

 

[Brendan Burgess]

Johnny

To be on the safe side, you should report it to the Revenue and tell them you are claiming Rent a Room relief.

Otherwise, you could get a huge tax bill with penalties.

It certainly was not designed for people to let a property tax-free while living in a separate property they don't own.

Brendan

 

[Johnnyinthesky]

I will do Brendan

 

[_OkGo_]

It does not have to be self contained within (see basement flat reference). You can rent a room in your house or an attached building once it was attached. Thats the case. You dont even have to own the building to rent it out.

Yes, correct but that is not your situation.

You own one property and are renting out the entire property. It is not your sole or main residence. You live in a separate property that is adjoining but it is distinctly not part of the same property. Both properties have separate titles/deeds so you cannot describe as a self-contained unit just because it was once part of the same building and continues to share a party wall.

It's very clear to me that you are incorrectly claiming this relief and that you have made incorrect assumptions about the self declaration. As @NoRegretsCoyote has pointed out, the burden is on you to accurately declare information that you submit.

The other people who I know in rent a room have exactly the same scenario. Attached but seperate

The simplest way to distinguish it is whether they can be sold separately, which in your case they can because they are two independent properties. The "attached but separate" that the rent-a-room refers to is access to the property. You and your tenants can have separate entrances and not share any common space but ultimately it is still a single property that could only be sold as one property

It looks like you need a new accountant as well as new FA...

 

[Brendan Burgess]

It looks like you need a new accountant as well as new FA...

+1

 

[RedOnion]

The residential tenancies legislation provides for security of tenure for tenants. These provisions are in Part 4 of the Residential Tenancies Act 2004. However, if the self-contained flat or apartment was originally part of the main house, you can choose to opt out of these provisions. This option is available under Section 25 of the Act. You must give the tenant notice in writing, before the start of the tenancy, if you wish to take this option"

Just note, this has absolutely nothing to do with Tax legislation. There are completely separate definitions for Residential Tenancies Act and the Rent a Room relief in TCA.

I'd definitely be seeking more technical advice in your circumstances.

 

[Johnnyinthesky]

Yes, correct but that is not your situation.

You own one property and are renting out the entire property. It is not your sole or main residence. You live in a separate property that is adjoining but it is distinctly not part of the same property. Both properties have separate titles/deeds so you cannot describe as a self-contained unit just because it was once part of the same building and continues to share a party wall.

It's very clear to me that you are incorrectly claiming this relief and that you have made incorrect assumptions about the self declaration. As @NoRegretsCoyote has pointed out, the burden is on you to accurately declare information that you submit.


The simplest way to distinguish it is whether they can be sold separately, which in your case they can because they are two independent properties. The "attached but separate" that the rent-a-room refers to is access to the property. You and your tenants can have separate entrances and not share any common space but ultimately it is still a single property that could only be sold as one property

It looks like you need a new accountant as well as new FA...

I just got a response from Revenue via my enquires online. I am correct and it is covered. They asked about it adjoining the house, does it have own entrance, is it RTB REgistered, Rental Income. All of which I provided so it appears it is covered.
It is exactly the same scenario for a friend who is doing rent a room with adjoining building.

Just note, this has absolutely nothing to do with Tax legislation. There are completely separate definitions for Residential Tenancies Act and the Rent a Room relief in TCA.

I'd definitely be seeking more technical advice in your circumstances.

I understand that. I read the circular also again today. I was putting it there to illustrate the revenue distinction of seperate: However, if the self-contained flat or apartment was originally part of the main house....

 

[Alkers86]

I just got a response from Revenue via my enquires online. I am correct and it is covered. They asked about it adjoining the house, does it have own entrance, is it RTB REgistered, Rental Income. All of which I provided so it appears it is covered.
It is exactly the same scenario for a friend who is doing rent a room with adjoining building.

I understand that. I read the circular also again today. I was putting it there to illustrate the revenue distinction of seperate: However, if the self-contained flat or apartment was originally part of the main house....

I agree that is it covered, the docuemnt linked to above specifically makes reference to a basement flat being eligible.