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Is a granny flat considered part of the rent a room scheme.

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  • 19-07-2014 10:22am
    #1
    gabsdot40
    Registered Users Posts: 366 ✭✭


    We have a large room at the back of our house which we are considering turning into a self contained granny flat. Eventually it'll be for granny but in the meantime we're hoping to rent it out.
    I know you can earn 7.5k tax free with the rent a room scheme but is a granny flat considered to be a room in this case.
    If not would we have to pay tax on all the rent collected?


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    #2
    markpb
    Registered Users Posts: 9,250 ✭✭✭markpb


    A tax advisor told a friend of mine to declare her granny flat under rent a room. That's not to say it's definitely covered but I'd give some weight to a tax advisors opinion.


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    #3
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    Revenue document here http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf?download=true mentions basement flats but isn't explicit.


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    #4
    The_Morrigan
    Moderators Posts: 9,368 ✭✭✭The_Morrigan


    murphaph wrote: »
    Revenue document here http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf?download=true mentions basement flats but isn't explicit.

    From reading that I would think that any self contained unit that is attached to the main residence is acceptable, however, if you have a separate stand alone structure in your back garden, then that is not considered part of the residence.
    4.2 Self-contained unit
    It is not possible to let an entire residence because the room or rooms that are let must form part of the residence and the residence must be occupied by the individual receiving the rent as his/her sole or main residence. The room or rooms can comprise a self-contained unit within the residence such as a basement flat or a converted garage attached to the residence. However, a self-contained unit that is adjacent to the residence but not actually attached to it cannot qualify for the relief


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    #5
    gabsdot40
    Registered Users Posts: 366 ✭✭gabsdot40


    Thanks for the replies


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    #6
    Greenmachine
    Registered Users Posts: 5,063 ✭✭✭Greenmachine


    The_Morrigan wrote: »
    From reading that I would think that any self contained unit that is attached to the main residence is acceptable, however, if you have a separate stand alone structure in your back garden, then that is not considered part of the residence.


    Frankly surprised by that.


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    #7
    The_Morrigan
    Moderators Posts: 9,368 ✭✭✭The_Morrigan


    Greenmachine wrote: »
    Frankly surprised by that.

    Why?


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    #8
    Mrs OBumble
    Registered Users Posts: 25,688 ✭✭✭✭Mrs OBumble


    I'm also surprised.

    Having a tenant in a granny flat is no different from having a stand-alone flat in the garden: it doesn't have the inconveniences of sharing your home that a tax incentive compensates home-owners for. So philosophically I don't see why it should qualify.

    Clearly it does - at the moment - from the link given. But don't make plans like it will always be like that: if I was a revenue official looking for loopholes to close, that would look like a good candidate.


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    #9
    Grandpa Hassan
    Registered Users Posts: 1,945 ✭✭✭Grandpa Hassan


    Mrs OBumble wrote: »
    I'm also surprised.

    Having a tenant is a granny flat is no different from having a stand-alone flat in the garden: it doesn't have the inconveniences of sharing your home that a tax incentive compensates home-owners for. So philosophically I don't see why it should qualify.

    Clearly it does - at the moment - from the link given. But don't make plans like it will always be like that: if I was a revenue official looking for loopholes to close, that would look like a good candidate.

    Would there be enough granny flats to even go through the bother of changing the rules?


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