Rent-a-Room Relief - going over the €14,000 threshold.

C

citizenmick

Registered User
Messages
20
A chairde,

Am I right in believing that if the rental income from renting a room in your primary residence exceeds the €14,000 threshold then the total rental income for the year is taxed and not just the excess over the €14,000 mark? And, if one does go over the threshold, are you then considered a landlord, i.e: Would the income fall under the normal tax regime that applies to rental property and, Dia idir sin agus an t-olc, would you have to register with the RTB?
 
citizenmick said:
Am I right in believing that if the rental income from renting a room in your primary residence exceeds the €14,000 threshold then the total rental income for the year is taxed and not just the excess over the €14,000 mark?
Click to expand...
Yes.

Rent-a-Room Relief

This page overviews rent a room relief.
www.revenue.ie www.revenue.ie
The income you receive must not exceed the exemption limit of €14,000. If it does, then you are taxed on the total amount.
Click to expand...
 
Another point is that the 14k includes any expenses you might charge.

For example, if you charge the licensee for electricity or any other utilities, that is included too.
 
No fixed price for utilities.
I have had this problem with tenants... immersion left on for days.. and on BATH !
 
fistophobia said:
No fixed price for utilities.
Click to expand...
Right, you want to charge for electricity, so there is an incentive to save it, but you also want to keep the total below 14k.

One option would be to give them a cap on included electricity usage. For example, you could say 269 per week with free electricity up to 30 per week.

If they go over, you charge more and then don't charge more.

Another option would be some kind of limiter for heating, or other high power usage. This would be similar to "fair usage" policies on the internet. If they go over the soft cap, you limit usage (say heating circuit is cut off if they go over limit). I am not sure if there is a device that does that.
 
LarryScott said:
One option would be to give them a cap on included electricity usage. For example, you could say 269 per week with free electricity up to 30 per week.
Click to expand...
I dont think it can be applicable for rent a room, the idea being its a room(s) in a shared house where the owner also resides.
Not sure how you could specify / measure this in a shared house.
 
AndroidMan said:
Not sure how you could specify / measure this in a shared house.
Click to expand...
You could setup the room with its own meter. This may not be able to cover everything, but if you have high energy using items (like heating), then you could measure that. Common services, like electric showers, couldn't be included, unless the licensee has a dedicated one.

You do need to be careful not to make it a "self contained unit". A single electric meter that covers everything could be used to argue that it is self-contained.

The key isn't really to charge for it, just to incentivize the licensee not to actually waste electricity.
 
LarryScott said:
The key isn't really to charge for it, just to incentivize the licensee not to actually waste electricity.
Click to expand...
I agree with you @LarryScott We don't charge for utilities but we have incentivized our 'lodgers' with a 'fair usage' approach, encouraging them to be careful with their usage and telling them if energy/utility costs get out of hand, we may revert to charging them. We don't even given a figure or maximum usage, but just emphasise the 'fair usage' a lot, which has made our lodgers conscientious and we have had no problems in five years of renting. (No immersion heater with 'bath', buíochas le Dia)

The key to rent-a-room in our experience is to choose the lodgers very carefully, so they are a good fit for the house I think it is important not to see the lodgers as simply 'tenants' and to provide a nice space and home for them, treat them well, and ensure there is a bit of give and take on both sides. On the other hand, it's important they know the rules and boundaries. If you choose the right lodgers for your home, it can work out really well.

Overall, our experience with the rent-a-room has been great. It has been a very rewarding experience. We rent two rooms to students. Our only child, a son, is a student so the lodgers have been fantastic company for him. We've had the same two tenants (German postgrads) for nearly three years now. I must say the students add to the life of the house. (We did learn the hard way, however, as our first few tenants were wild Irish boyos).

And, of course there is the income.... I don't know of any simpler and straightforward way to earn €14,000 extra income a year.

Anyhow, personally I would not go down the road of charging for utilities but I would find a way to incentivise the lodgers to be conscientious of usage.
 
LarryScott said:
You do need to be careful not to make it a "self contained unit". A single electric meter that covers everything could be used to argue that it is self-contained.
Click to expand...
The test is not if it’s self contained, the test is if it’s attached to the house. You can create a granny flat with its own external door, kitchen, en-suite.
 
You must log in or register to reply here.
Back
Top