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Pensioner and rental income ?

  • 27-10-2009 12:29PM
    #1
    EnigmasWhisper
    Registered Users, Registered Users 2 Posts: 197 ✭✭


    My mother is a 70 yr old pensioner and is considering renting out a self contained granny flat at side of her house. Ive been told because its self contained that its not covered under the rent a room scheme. She gets a little over 24,000 a year from state pension and a widow pension. She would probably be looking at renting granny flat for 6000 a year. My question is, considering her age and that her income is from pensions is she liable for tax and if so how much ? Thank you in advance


Comments

  • #2
    misspiggy40
    Users Awaiting Email Confirmation Posts: 277 ✭✭misspiggy40


    Hi there. Have a look at page 29 of this briefing which discusses that issue.


  • #3
    EnigmasWhisper
    Registered Users, Registered Users 2 Posts: 197 ✭✭EnigmasWhisper


    misspiggy40 wrote: »
    Hi there. Have a look at page 29 of this briefing which discusses that issue.

    Hi, thanks for responding however that page seems to deal with compensation issues and those that are incapacitated due to injury. I scrolled down the document and it does mention that granny flats can be exempt fro tax under the rent a rom scheme. Unfortunately the documenet you showed me is over 10 years old and the laws have changed since then I think


  • #4
    BarryM
    Registered Users, Registered Users 2 Posts: 837 ✭✭✭BarryM


    EnigmasWhisper wrote: »
    My mother is a 70 yr old pensioner and is considering renting out a self contained granny flat at side of her house. Ive been told because its self contained that its not covered under the rent a room scheme. She gets a little over 24,000 a year from state pension and a widow pension. She would probably be looking at renting granny flat for 6000 a year. My question is, considering her age and that her income is from pensions is she liable for tax and if so how much ? Thank you in advance

    Tricky one, not sure how a flat that is part of your house is treated - if it isn't rent a room. Normally, she would need to go to self assessment, declaring her pension and the paye paid and then the rental income. If she passes the threshold for tax (she is treated as single, getting those allowances on her PAYE?) then she'll be taxed on the 'surplus' If the flat is treated as 'normal' then she can claim expenses against it if she does repairs, etc. Will the tenant pay the ESB etc.,? this will limit the expenses aspect, but then again, if your mother pays that is she really 'letting it' - see what I mean??

    Does she get an annual P60? She should get one, even if she only has a pension.

    Either way, if her total income is over the threshold, she'll be taxed, pension is taxable if it forms part of total income. Most pensioners don't reach the limit, but it is still technically taxable if she has other income.....

    Other thing to think about - insurance, if the tenant pays, fine if your mother pays she needs to tell the insurance co. Any 'extra' might be treated as an expense against the income.


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