Renting out a room in your home

If you rent out a room (or rooms) in your home to private tenants, therental income you earn will be exempt from income tax, provided this incomedoes not exceed a certain limit in a tax year. This is called therent-a-room relief. A self-contained unit, such as a basement flat ora converted garage attached to your home, can qualify for this relief.

While renting out a room that is part of your home is not covered bylandlord and tenant law, renting out a self-contained unit is covered – see‘Your rights and obligations’ below.

Depending on their circumstances, your tenant(s) may qualify for the HousingAssistance Payment (HAP) – read more in ‘Housing Assistance Payment’below. In certain circumstances, a tenant can claim RentSupplement. Rules

For you to qualify for rent-a room relief, your home must be located in theState and you must occupy it as your sole residence during the year ofassessment. This means that it is your home for the greater part of the yearand is where people would normally expect to make contact with you. In mostcases, you do not have to own the property – you could be a tenant and besub-letting to someone else. (In these cases, you should check with yourlandlord that sub-letting is allowed – see our document on tenants’rights and obligations.) However, if you are renting to a HAP tenant youmust own the property and provide proof of ownership.

Currently, the total (gross) rent that you get, which includes any moneythat the tenant pays for food, utilities, laundry or similar goods andservices, cannot exceed €14,000 in the tax year (1 January to 31 December)– see ‘Exclusions from rent-a-room relief’ below.

You cannot deduct expenses from your rental income while claimingrent-a-room relief. However, depending on the circumstances, it may be worthyour while to opt out of the relief in a particular year in order to offsetexpenses against the rental income and avail of wear and tear allowances, seerevenue.iefor examples of when this can be beneficial. The 'How to apply' section belowdescribes how to opt out of rent-a-room relief.

If you qualify for rent-a-room relief, the income you get from renting outthe room will be exempt from PRSI, the UniversalSocial Charge or income tax. However, it must be included on yourannual income tax return.

Rent-a-room relief will not affect your exemption from Capital GainsTax (CGT) if you sell your home.

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. Inthis case, Revenue will treat your the full rental income minus allowableexpenses as part of your total income for tax purposes and this should beincluded in your tax return. You are renting the room in your home to your civil partner, son ordaughter (but there is no restriction in the case of other familymembers)You are an employee or office-holder in a company, and the company paysyou to allow clients to use the room in your home on an occasionalbasisYou are renting the room to short-term guests, for example, through anonline accommodation booking site

The relief applies only to residential tenancies, not to short-term letarrangements. 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 iscovered, but providing accommodation to occasional visitors for short periods,for example, through an online accommodation booking site, is not, as thisincome is not considered to be rental income. This is because the visitors usethe accommodation as guests rather than tenants. Revenue has published aguidance manual 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 outfor short breaks during the summer as well, you must identify the income youget from the short rentals separately from the income that qualifies forrent-a-room relief, when making your tax return to Revenue.

Youcan read more about rent-a-room relief on revenue.ie.Effect of rental income on social welfare payments

If you are getting a means-tested socialassistance payment from the Department of Social Protection, any rentalincome 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 StatePension (Non-Contributory) or a Widow's/Widower'sor Surviving Civil Partner’s (Non-Contributory) Pension

and You would be living alone unless you rented out a room in your home. Housing Assistance Payment

If your tenant is applying for the Housing Assistance Payment (HAP), youwill need to provide certain information to the local authority, whichadministers the HAP. The local authority will pay you HAP directly. Thisinformation includes:The amount of the monthly rentYour bank account payment detailsAn undertaking regarding the property’s compliance with standards forrental accommodationAn undertaking regarding your tax complianceProof that you own the property

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

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

Read more in our document onHAP and in the landlordinformation booklet (pdf).Your rights and obligationsSelf-contained units

If you rent out a self-contained unit in your home, such as a convertedgarage attached to your home or a basement flat, the rights andobligations under residential tenancies legislation apply to you. Forexample, you are obliged to register thetenancy with the Residential Tenancies Board (RTB), provide a rent book to thetenant and ensure that the accommodation provided meets minimumphysical standards.

The residential tenancies legislation provides for security of tenure fortenants. These provisions are in Part 4 of the ResidentialTenancies Act 2004. However, if the self-contained flat or apartment wasoriginally part of the main house, you can choose to opt out of theseprovisions. This option is available under Section25 of the Act. You must give the tenant notice in writing, before the startof the tenancy, if you wish to take this option.Rooms that are not self-contained

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

This also means that private tenants living in your home are living under alicensee agreement, not a tenancy agreement, andare really only entitled to reasonable notice if you choose toterminate the agreement. Tenants are, however, entitled to refer disputes underthe SmallClaims Procedure.

Common claims that are heard under the Small Claims Procedure includedisputes about retention of a tenant's deposit for what they consider unfairreasons, or deductions from rent for damage to property that is over and abovenormal 'wear and tear'.

Your tenants can find out more about their rights in our document Sharingaccommodation with your landlord and can also contact Threshold foradvice– see 'Where to apply' below.

Before you arrange to rent out a room in your home, it is stronglyrecommended that you and the tenant agree some ground rules and put themin 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 will you or your tenant have to give if either of youchooses to end the tenancy?How much rent will the tenant pay and how often (for example, weekly,monthly)?How will this rent be paid (cash, cheque, standing order etc.)?When will the rent be reviewed and how much notice will you give thetenant of a rent review?How are utility bills (such as electricity, gas, phone, broadband, TV,waste charges) to be divided between you and the tenant?Can the tenant have visitors to stay overnight?Are there any restrictions regarding noise levels? Rates