Renting out a room in your home

The rent-a-room relief lets you earn up to €14,000 per year tax-free if you rent out a room in your home to private tenants. You can also get the relief if you rent out a self-contained unit, such as a basement flat or a converted garage attached to your home.

Upcoming extension of rent-a-room relief

The Government plans to extend the rent-a-room relief to social housing tenants. This means that a social housing tenant will be able to rent out a spare room in their home and earn up to €14,000 in rental income per year tax-free.

To qualify for rent-a room relief:

• Your home must be located in Ireland.
• You must occupy your home as your sole residence. This means that it is your home for the greater part of the year and is where people would normally expect to contact you.
• Your total rental income cannot be more than €14,000 per tax year (1 January to 31 December). This includes any money that your tenant pays for food, utilities, laundry or similar goods and services.
• The people you rent to must use the room on a long-term basis. This means stays of more than 28 consecutive days.

You do not have to own the property to qualify for rent-a-room relief. You could be a tenant and be sub-letting to someone else. In this case, you should check with your landlord that sub-letting is allowed. However, if you are renting to a HAP tenant you must own the property and provide proof of ownership.

Exclusions from rent-a-room relief

You will not qualify for the relief if:

• Your gross income from rent and related services is over €14,000. In this case, Revenue will treat the full rental income minus allowable expenses as part of your total income for tax purposes and this should be included in your tax return.
• You are renting the room in your home to your civil partner, son or daughter (but there is no restriction for other family members).
• You are an employee or office-holder in a company, and the company pays you to allow clients to use the room in your home on an occasional basis.
• You are renting the room to short-term guests for a period that does not exceed 28 consecutive days, for example, through an online accommodation booking site.

The relief applies only to residential tenancies, not to short-term lets. Short-term lets are lettings that do not exceed 28 consecutive days. The occupants must be using the room on a long-term basis. So, renting a room to a student for the academic year or for a one-month course is covered, but providing accommodation to occasional visitors for short periods, for example, through an online accommodation booking site, is not, as this income is not considered to be rental income. This is because the visitors use the accommodation as guests rather than tenants. Revenue has published guidance on how this income is treated for tax purposes (pdf).

If you normally rent out the room for the academic year and you rent it out for short breaks during the summer as well, you must identify the income you get from the short rentals separately from the income that qualifies for rent-a-room relief, when making your tax return to Revenue.

You can read more about rent-a-room relief on revenue.ie.

You cannot deduct expenses from your rental income while claiming rent-a-room relief. However, it may be worth your while to opt out of the relief in a particular year to offset expenses against the rental income and avail of wear and tear allowances, see revenue.ie for examples of when this can be beneficial. The 'How to apply' section below describes how to opt out of rent-a-room relief.

If you qualify for rent-a-room relief, the income you get from renting out the room will be exempt from 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 exemption from Capital Gains Tax (CGT) if you sell your home.

If you are getting a means-tested weekly social assistance payment, Supplementary Welfare Allowance or Working Family Payment, you can get up to €269.23 a week (€14,000 per year) for renting out a room in your own home without it affecting your social welfare payment.

This also applies if you are getting the Living Alone Increase, Household Benefits Package or Fuel Allowance. However, with Fuel Allowance, the person renting the room from you must be getting a qualifying social welfare payment or must qualify for Fuel Allowance in their own right. You should check if renting a room in your home will affect any other payments.

This does not apply to short-term lettings. Short-term lettings are lettings that do not exceed 28 consecutive days. It also does not apply if you are renting a room to your employee or to an immediate family member. Immediate family members are:

• Your spouse, civil partner or partner
• Your child, or the spouse of your child
• Your parent, step-parent or parent-in-law
• Your sibling, including step-siblings or siblings-in-law
• Your grandparent or your grandchild
• Your aunt or uncle
• Your nephew or niece

The Accommodation Recognition Payment is a tax-free payment of €800 per month for hosting refugees from Ukraine. This payment is not taken into account in the means test for any grants or payments from the Department of Social Protection or other public bodies.

If you rent out a self-contained unit

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 must register the tenancy with the Residential Tenancies Board (RTB) every year, provide a rent book to the tenant and ensure that the accommodation provided meets minimum physical standards.

Residential tenancies legislation allows tenants to stay in rented accommodation for a set amount of time. However, if the self-contained flat or apartment was originally part of the main house, you can choose to opt out of these rules. This option is available under Section 25 of the Residential Tenancies Act 2004. You must give the tenant notice in writing, before the start of the tenancy, if you want to do this.

If you rent a room that is not self-contained

If the part of your home that you rent out is not self-contained, you are not covered by landlord and tenant legislation, so the rights and obligations under that legislation do not apply to you. For example, you do not have to register as a landlord with the RTB, provide a rent book to the tenant and the accommodation does not need to meet any minimum physical standards. However, if you are renting to a HAP tenant the accommodation must meet minimum standards.

This also means that private tenants living in your home are living under a licensee agreement, not a tenancy agreement, and are only entitled to reasonable notice if you choose to terminate the agreement. However, they can refer disputes under the Small Claims Procedure.

Common claims that are heard under the Small Claims Procedure include disputes about a tenant's deposit not being returned for what they consider unfair reasons, or deductions from rent for damage to property that is over and above normal 'wear and tear'.

Your tenants can find out more about their rights in our page Sharing accommodation with your landlord and can also contact Threshold for advice– see 'Where to apply' below.

If you rent a room to someone getting the Housing Assistance Payment

Your tenant may qualify for the Housing Assistance Payment (HAP). If your tenant is applying for the Housing Assistance Payment (HAP), you will need to provide certain information to the local authority. The local authority will pay you HAP directly. This information includes:

• The amount of the monthly rent
• Your bank account payment details
• An undertaking regarding the property’s compliance with standards for rental accommodation
• An undertaking regarding your tax compliance
• Proof that you own the property

The local authority will inspect the property within 8 months of the first HAP payment, unless the accommodation has already been inspected in the last 12 months. An inspector will check that the accommodation meets the minimum physical standards for rental accommodation.

You must show that your tax affairs are in order by producing evidence of tax clearance from Revenue. Tax compliance is checked in ‘real-time’ on Revenue’s electronic tax clearance system.

Read more in our document on HAP and in the landlord information booklet (pdf).

Making an agreement with your tenant

Before you rent out a room in your home, it is recommended that you and the tenant agree some ground rules and put them in writing. If you and your tenant each sign and keep a copy of this agreement, you can both refer to its terms in the event of confusion or disagreement. These ground rules might include:

• How long is the tenancy going to last?
• How much notice you or your tenant must give if either of you chooses to end the tenancy?
• How much rent will the tenant pay and how often?
• How will rent be paid? Will it be in cash, or by cheque or standing order?
• When will the rent be reviewed and how much notice will you give the tenant of a rent review?
• How are utility bills divided between you? For example, bills for electricity, gas, phone, broadband, TV or waste charges.
• Can the tenant have visitors to stay overnight?
• Are there any restrictions about noise levels?

Renting a room to a student

If you are renting a room to a student, there is a voluntary regulatory framework to help set ground rules between you and the tenant. These have been created by the Department of Further and Higher Education, Research, Innovation and Science along with a sample license agreement (pdf). It is recommended that you agree a written licence agreement with your tenant before they move in.

Along with the ground rules listed above, the licence agreement also includes the following:

• How much the deposit will be
• The date the deposit will be returned to the student after the licence agreement has ended
• The possible reasons why you may keep part of the deposit (for example, unpaid rent or damage to property)
• The method used to record that the rent has been paid
• A list of furniture, provided by the landlord, which the student has exclusive use of
• Any general rules about the your access to the bedroom (such as the notice you will give)

The licence agreement can be adjusted to suit the needs of the landlord and the student.

Rental income from renting a room in your home is exempt from tax, up to a maximum limit of €14,000.

If more than one person is entitled to the rent, this limit is divided between the people concerned. For example, if you and your spouse both own the home you are renting out a room in.

To claim rent-a-room relief you must record your rental income when making your annual tax return.

You can complete and submit your tax return form online using:

• Revenue's myAccount Service if you are a PAYE taxpayer (Form 12)
• Revenue Online Service (ROS) if you are self-employed or a PAYE taxpayer with other sources of income (Form 11)

Alternatively, you can complete a hard-copy annual tax return. You record your rental income for rent-a-room relief in the ‘Exempt income’ section of your tax return form and return the completed form to your local tax office.

The tax office can answer any queries you may have and will help if you have any difficulties completing the form.

If you want to opt out of the rent-a-room relief in a particular tax year and be taxed on the rental income instead, you must notify Revenue in writing, on or before the return filing date for that tax year. Read more on revenue.ie.

If you need help you can contact Revenue. You can also send queries to Revenue through myEnquiries.