If you rent out a room (or rooms) in your home to private tenants, the rental income you earn will be exempt from income tax, provided this income does not exceed €10,000 in a tax year. This is called the rent a room relief.
Where more than one person is entitled to benefit from the rent (for example, you and your spouse), the limit of €10,000 is divided between the individuals concerned. Tenants who rent out a room in your home are entitled to claim tax relief on rent paid.
In certain cases you will not be entitled to claim the relief. These exclusions are listed under 'Rules' below.
If you choose to rent out a room in your home, you are not covered by landlord/tenant legislation in Ireland. This means that you are not obliged to register with the Private Residential Tenancies Board (PRTB) as a landlord, provide a rent book to the tenant or ensure that the accommodation provided meets any minimum physical standards.
This also means that private tenants living in your home are living under alicensee agreement not a tenancy agreement and are really only entitled to reasonable notice if you choose to terminate the agreement. Tenants are, however, entitled to refer disputes regarding periods of reasonable notice, retention of deposits, and disputes regarding deductions from rent for damage to property that is over and above normal wear and tear to the Small Claims Court.
Before you agree or choose to rent out a room in your home, it is strongly recommended that you and the tenant agree some ground-rules in advance. You should put these ground-rules in writing and both parties (that is, you and your tenant) should sign and each keep a copy of this agreement so you can both refer to the terms of your agreement in the event of confusion or disagreement. Some of the ground-rules you might consider are:
If you are getting a means-tested social assistance payment from the Department of Social Protection, any rental income you get will be assessed as means and may affect your payment. However, rental income will not be assessed as means if you are getting a State Pension (Non-Contributory) or Widow's/Widower's or Surviving Civil Partner’s (Non-Contributory) Pension and you would be living alone unless you rented out a room in your home.
To get rent a room relief:
You cannot deduct expenses from your rental income to qualify for rent a room relief. If you qualify for rent a room relief, the income you get from renting a room in your home is not liable to PRSI, the Universal Social Charge or income tax. However, it must be included on your annual income tax return.
Rent a Room Relief will not affect your mortgage interest relief or your exemption from Capital Gains Tax (CGT). (CGT is a tax on the capital gain (profit) made on the disposal of an asset, for example, when you sell a house).
Exclusions from rent a room relief
You will not qualify for tax relief on the rental income if:
Rental income from renting a room in your home is exempt from tax, up to a maximum limit of €10,000.
Complete a Tax Return Form 12 (pdf) at the end of the tax year indicating that you have received rental income for rent a room relief. Form 12 is available from your local tax office.
Your completed annual tax return should be returned to your local tax office. Your local tax office can answer any queries you may have and will assist if you have any difficulties completing your annual Tax Return.
You can read more about rent a room relief in Revenue's leaflet A guide to rental income (IT 70).
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.