Rent a Room Relief and Income Tax

A: The rent a room relief applies to sums arising to an individual in respect of the letting, for residential purposes, of a room or rooms in his/her principal private residence. You cannot have more than one principal private residence at a given time, therefore you can only claim the relief for the €9,000 you earned. This amount can continue to be earned tax free.

The profit you earn from the second property will be liable to income tax as it will be treated as an investment property. To calculate the taxable profit you will be allowed to deduct certain costs relating to the property, such as 75% of the mortgage interest on the property, repairs and maintenance, accountancy fees etc. The profit is then taxed, depending on your level of other sources of income the tax rate can be as much as 52%.

 

Date published 2 Sep 2015

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.