RTÉ Radio 1 Interview: Rent-a-Room Scheme

RTÉ Radio 1 Drivetime Interview

Paul McCutcheon, Partner and Head of Housing recently spoke with Colm Ó Mongáin on RTÉ Radio 1's Drivetime programme to outline the legal and financial considerations of the Rent-a-Room Scheme, including eligibility criteria.

Paul also discussed planning permission requirements when considering renovations to divide a property and protection for homeowners.     

Paul was joined by Ciarán Ferrie, Architect and Director at Ava Housing, who discussed how the Ava Housing model supports older homeowners to retrofit their homes while creating additional rental capacity in underoccupied housing.

Listen to the Radio Interview

RTÉ Radio 1 - Drivetime - From One Home to Two - How to Split up your House

About the Rent-A-Room Scheme

The Rent-a-Room Scheme in Ireland allows homeowners (or in some cases, primary tenants) to earn up to €14,000 per year tax-free by renting out a room in their sole or main residence.

This income is exempt from Income Tax, PRSI and Universal Social Charge (“USC”) but you must still declare the rental income on your annual tax return, even if it is below the €14,000 threshold.

Providing the rental income remains within the €14,000 threshold, the rental income generally will not affect means tested social welfare payments (such as the Fuel Allowance or the Living Alone Increase) and local authority tenants can now participate in a specific scheme to rent a room to a third level student, with local authority approval and still avail of tax relief. Tenants can also claim the Rent Tax Credit for payments under Rent a Room arrangements provided they are not renting from an immediate family member.

Rent-A-Room Scheme Conditions

To qualify for the relief, specific conditions must be met: 

• Sole Residence: The property must be your principal private residence (your home for the greater part of the year).

• Income Limit: Your gross rental income, including any payments for services like food or utilities, must not exceed €14,000 in a tax year. If it does, the entire amount is taxable, not just the excess.

• Long-Term Basis: The accommodation must be let on a long-term basis, generally meaning stays of more than 28 consecutive days. Short-term lets through Airbnb and similar services do not typically qualify.

• Tenant Type: You cannot rent the room to your spouse, civil partner or your child or the child of your civil partner. You are permitted to rent to other family members but you cannot rent a room to your employer.

• Type of Unit: The room can be a self-contained unit (like a converted garage or basement flat) if it is attached to the main property. A completely separate, free-standing unit does not qualify.

• No Expense Claims: You cannot claim expenses (e.g., for repairs, mortgage interest or utilities) against the rental income if you are claiming the Rent a Room Relief. In some scenarios, it may be more beneficial to opt out of the scheme and claim expenses instead. 

Renting a room in your home means the occupant is usually a licensee, not a tenant, and thus not covered by the full provisions of the Residential Tenancies Board (“RTB”) legislation. It is recommended to have a written licence agreement to outline rules and expectations.

Further Information

For further details about the Rent-a-Room Scheme or expert legal guidance on any Housing matter, please contact Partner Paul McCutcheon or a member of our Property Team.