Rent allowance

S&k

I am going to rent a house that accepts rent allowasnce, (Yipiee there is one ) However the rent exceeds the limit for the area, Ie. rent is 1400. allowance is only to 1000, What I am wondering is Can I get someone to share the house and they pay the 400.... will the Social accept this ?


Thanks

The_Conductor

S&k wrote:

I am going to rent a house that accepts rent allowasnce, (Yipiee there is one ) However the rent exceeds the limit for the area, Ie. rent is 1400. allowance is only to 1000, What I am wondering is Can I get someone to share the house and they pay the 400.... will the Social accept this ?


Thanks

You would also have to consider whether the landlord would accept this arrangement. Its quite normal for people to rent houses in areas above the threshold for their rental allowance and to make up the difference themselves (there are even a couple of threads in this forum from people doing this).

As you are not the owner of the house, any income you earned from subletting rooms to another person (who by definition would not be a tenant) would be liable for income tax, and would also factor in your income threshold for rent-allowance.

In short- while it would have to be acceptable to DSFA, you would also have to figure how it would affect your income threshold and also factor in that this additional income is taxable income, it cannot by definition be considered as part of the rent-a-room scheme, as you don't own the house.

Explore this option carefully before proceeding.......

antoinolachtnai

I don't see the tax angle myself. If she isn't making a net profit from the sharing deal, I don't see the revenue being bothered, although I agree, there might be a theoretical problem. Lots of people sublicense rooms in a house they are renting. It's no big problem.

I have no idea what the social welfare would make of this though.

Victor

I don't see a particular problem, but raise it with the Community Welfare Officer (I presume it is the CWO that is paying the rent allowance).

gibo_ie

I am a landlord of a number of houses and had a similar situation recently. I spoke to the health board who say while the official line is that the tenant can not obviously afford the house at this price, they do not object to the tenant paying the extra themselves (in your case 400 per month). But this is much higher than the difference in mine and 400 per month from the tenant may bring them below the "poverty line" and shouldn't be allowed.
With regard to subletting smccarrick is technically right and the deal would be with you and another tenant and therefore it is liable to taxable income. If you found someone else and asked the landlord to have a contract directly with them then this situation would not be the same, although the health board may then change your allowance for rent!!!
Speak with your local Welfare Officer as it all depends on how many children you have, how long out of work etc... it is quite complex really...
Good Luck anyway,
M

Victor

gibo_ie wrote:

I am a landlord of a number of houses and had a similar situation recently. I spoke to the health board who say while the official line is that the tenant can not obviously afford the house at this price, they do not object to the tenant paying the extra themselves (in your case 400 per month). But this is much higher than the difference in mine and 400 per month from the tenant may bring them below the "poverty line" and shouldn't be allowed.

I've not come across this. As I understand it, the tenant should only be paying a very small amount from their own resources (about 15 euro / person / week). If they are paying more than this, then the CWO will be of the opinion tha the property is too expensive.

With regard to subletting smccarrick is technically right and the deal would be with you and another tenant and therefore it is liable to taxable income.

But that 'rent' is offsetable agaisnt an identical expense. Surely a nil liability?

The_Conductor

Victor wrote:

But that 'rent' is offsetable agaisnt an identical expense. Surely a nil liability?

For tax purposes it doesn't work that way. Irrespective of any other liabilities in the OPs case, they are entitled to a rental allowance on the total expense, at the lower rate, to a maximum of around 7k per annum. Any costs they have over this are considered sunk costs by the revenue commissioners and they are not allowed any allowances towards them. If they were blind owners (from a tax perspective) and renting the house on the other hand, then the costs would all be allowable costs and could be offset against the rental income (its convoluted, but possible, due to a loophole).

Unfortunately the liability is not offset against the income in the OPs case- there is no provision for this in the Irish tax code.

antoinolachtnai

So you are saying that moneys received from subletting and sublicencing in general are taxable if you go above the 7000 euros limit?

Victor

Of course 12 x 400 = 4,800 < 7,000.

The_Conductor

antoinolachtnai wrote:

So you are saying that moneys received from subletting and sublicencing in general are taxable if you go above the 7000 euros limit?

Yes, and there is no limit, its taxable in its entirety, unless the person subletting has a vested interest in the property.

A persons tax-free-allowance would of course continue to apply. If they were below their income threshold, even with the subletting/sublicencing income, they would not have a tax liability (but legally they would still be expected to present an annual tax return as this would constitute non PAYE income, irrespective of whether they owed anything or not). Obviously most people ignore this totally, and I've never heard of anyone being taken to task over this by the Revenue Commissioners, but it is illegal nonetheless.

chasm

S&k wrote:

I am going to rent a house that accepts rent allowasnce, (Yipiee there is one ) However the rent exceeds the limit for the area, Ie. rent is 1400. allowance is only to 1000, What I am wondering is Can I get someone to share the house and they pay the 400.... will the Social accept this ?


Thanks

It has been about 3 years since i claimed RA but it used to be the case that what you are proposing would be refused as it would be classed as subletting, but you may be able to house share with someone on an equal basis, ie each of you is liable for 700 each. The CWO will be able to tell you exactly how much RA
you will be entitled to if you ask. Dont forget that you have to pay the first E13 of your rent(per week) Not sure if this amount is for all regions or just where i live.