Rent a room scheme but moving out with my gi.end

Darth Rabbit

Hey,

A number of years ago I bought a house with my brother so we could both 'get on the property' ladder. The plan was to hold the house for a year or two then sell up and move on. Then the crash happened and have been in massive negative equity since.
I've been seeing a girl for a number of years now so we are looking at apartments for just the just the two of us and I plan to rent my room out under this 'rent a room scheme'. I still own 50% of the house but can't anyone advise if I still qualify to receive €10,000 rent free under this scheme or does the fact that I will no longer be in the disqualify me?

Any feedback greatly appreciated

athtrasna

Darth Rabbit wrote: »

Hey,

A number of years ago I bought a house with my brother so we could both 'get on the property' ladder. The plan was to hold the house for a year or two then sell up and move on. Then the crash happened and have been in massive negative equity since.
I've been seeing a girl for a number of years now so we are looking at apartments for just the just the two of us and I plan to rent my room out under this 'rent a room scheme'. I still own 50% of the house but can't anyone advise if I still qualify to receive €10,000 rent free under this scheme or does the fact that I will no longer be in the disqualify me?

Any feedback greatly appreciated

Does your brother still live there? If so he'd be qualified to accept rent/bills up to 10k under the rent a room scheme. If he doesn't then neither of you qualify as you must be in residence to be entitled to the tax free income under rent a room.

quadrifoglio verde

Darth Rabbit wrote: »

Hey,

A number of years ago I bought a house with my brother so we could both 'get on the property' ladder. The plan was to hold the house for a year or two then sell up and move on. Then the crash happened and have been in massive negative equity since.
I've been seeing a girl for a number of years now so we are looking at apartments for just the just the two of us and I plan to rent my room out under this 'rent a room scheme'. I still own 50% of the house but can't anyone advise if I still qualify to receive €10,000 rent free under this scheme or does the fact that I will no longer be in the disqualify me?

Any feedback greatly appreciated

As far as I know you need to be living there to do that

Darth Rabbit

He is unemployed and gets some state benefits. It would probably affect him if he is in receipt of rent?

Mrs OBumble

You need proper financial advice here, not randoms on the interwebs. I think it's likely that the answer will depend on how the mortgage is paid and what the actual legal structure for your purchase is, and that you will be liable for tax. But I'd be guessing without asking a bunch of questions, and I'm not qualified to give financial advice. Talk to an accountant.

Eldarion

If he is on social welfare then rent received under the rent-a-room scheme will be considered income for him and will be considered during means testing. We've had a poster here before in the exact same situation.

The_Morrigan

Eldarion wrote: »

If he is on social welfare then rent received under the rent-a-room scheme will be considered income for him and will be considered during means testing. We've had a poster here before in the exact same situation.

Yup that was me - I lost my JSA because of the income from the rent a room scheme.

OP if you move out then you can't avail of this scheme, you will have to be a 'proper' landlord with prtb registrations, tax returns and all the rights and obligations of both tenants and landlords being adhered too.

Mrs OBumble

Eldarion wrote: »

If he is on social welfare then rent received under the rent-a-room scheme will be considered income for him and will be considered during means testing. We've had a poster here before in the exact same situation.

But only if the brother is actually receiving the income.

If the income is going to the OP, who is still paying his own share of the mortgage, then the scenario may be different.

It could get even more tricky if the brother is actually being handed the cash and using it to physically make the payment on the OP's behalf.

Professional advice, separate bank account etc are all needed here ....

The_Morrigan

The_Morrigan wrote: »

Yup that was me - I lost my JSA because of the income from the rent a room scheme.

OP if you move out then you can't avail of this scheme, you will have to be a 'proper' landlord with prtb registrations, tax returns and all the rights and obligations of both tenants and landlords being adhered too.

I don't see how or why he could go down that route when the house is in fact owner occupied by his brother. Surely if the op gets the money into his hand then the brother's JSA isn't affected and the brother living there fulfills the "owner occupied" requirement of the rent a room.

Do you even need to declare or register a rent a room, I thought it didn't need to be?

The_Conductor

Emmaline Grumpy Topcoat wrote: »

Surely if the op gets the money into his hand then the brother's JSA isn't affected and the brother living there fulfills the "owner occupied" requirement of the rent a room.

This is tax evasion- and is illegal. If one party is availing of the rent-a-room scheme- they have to be physically living in the property. Having their brother live there does not count. Revenue take a very poor view of people abusing the system like this- its likely that the penalties applied may be a multiple of times any tax that may have been due on the rental income may be.

Emmaline Grumpy Topcoat wrote: »

Do you even need to declare or register a rent a room, I thought it didn't need to be?

You have to declare it in an annual tax return. Also- some of the social welfare allowances cater to recipients availing of the scheme- so it could potentially get flagged that way.

Please read up on the scheme- before you give out factually inaccurate information- its actually a neat enough little scheme- with very few rules associated with it- there is no excuse to offer such inaccurate information here.

murphaph

The_Morrigan wrote: »

Yup that was me - I lost my JSA because of the income from the rent a room scheme.

Interesting. As far as I know if you own and rent property it is purely the value of the assets that are considered for the means test. The actual rent derived is not used in the calculation, so even if you own property but choose not to let it, your benefits are reduced. I wasn't aware there were special rules for tge rent s room scheme.

The_Conductor

murphaph wrote: »

Interesting. As far as I know if you own and rent property it is purely the value of the assets that are considered for the means test. The actual rent derived is not used in the calculation, so even if you own property but choose not to let it, your benefits are reduced. I wasn't aware there were special rules for tge rent s room scheme.

Jobseekers Allowance (JA) is means tested on all income- including the rent-a-room scheme. If your income is above the preordained level- your benefit is cut- and if its over the threshold- it can be stopped in its entirety.

If you are living in a property and own the property- the property is not evaluated as part of the means test- but any income derived from the property (such as the aforementioned rent-a-room scheme)- is.

Property and assets, savings and investments- not personally used (can include investment property, shares etc etc) are considered as means for the benefits test- and any benefit will be reduced according to a set formula.

So- if you live in your own home- its not counted. If you get a small income from letting a room- the small amount of income is counted. If you have other assets- they count.

The_Conductor

The_Conductor wrote: »

there is no excuse to offer such inaccurate information here.

I wasn't offering information I was putting my point across in order to see if what I was saying was correct or not.

Mrs OBumble

The_Conductor wrote: »

Jobseekers Allowance (JA) is means tested on all income- ....
So- if you live in your own home- its not counted. If you get a small income from letting a room- the small amount of income is counted. If you have other assets- they count.

Ahh, that's not quite correct:

If you own a property, and are not living in it, then the capital value of the property is used to calculate a nominal "income" from it. It is this nominal value that is counted in your means assessment, not the actual income that you get. The latter is simply not taken into account for Welfare purposes. But it is assessed for Revenue purposes. (Yes, I've been there and done that ...)

This case is even more complicated assuming that both brothers part own the property. I would imagine that there will be determination made by a Welfare inspector first of all, and then another one by Revenue, about liabilities. These may or may not even work the same way (remember that co-habitating couples get treated very differently by the two systems)

The_Conductor

Have a look at the next part of what I wrote:

Property and assets, savings and investments- not personally used (can include investment property, shares etc etc) are considered as means for the benefits test- and any benefit will be reduced according to a set formula.

There is a set formula for reducing benefits on the basis of property, assets, savings or investments- which are not used on a personal basis. Aka- a person's abode does not feature- but if they own other property- it does.

I thought that was clear from what I posted.

With respect of the rent-a-room scheme- it does come up in this forum on a frequent basis. The official advice given to multiple forum users (over the past decade)- has been they have to reside in the residence as their PPR- if they wish to designate income received from licencees as rent-a-room income.

In the case of JA- rent-a-room income 100% definitely does count as income under which the benefit would be assessed and reduced or eliminated (as appropriate). Not all state benefits are treated in this manner- JA is however.

In previous examples in this forum- where two parties owned the property- both parties were entitled to rent rooms in their residence to the 10k ceiling- which I find strange- as I would have imagined there would have been a 10k limit associated with the property- but this is not how it was determined. Perhaps given the recent crackdown they may not be as willing to look on arrangements such as this on as lenient a basis. However- the central tenent of the scheme- where the owner who was claiming the allowance (the rent-a-room allowance) had to be resident in the dwelling- has been set in stone the whole way along.

People have abused the scheme in numerous manners- and indeed many have gotten away with it- but it doesn't mean its right- or if they're caught that they won't be punished..........

shenanagans

You can only rent under the 'rent a room scheme' if it's you principal private residence, which it isn't if you're moving out. look up rules for 'rent a room scheme' on the citizens information website.

Mrs OBumble

The_Conductor wrote: »

I thought that was clear from what I posted.

What was not clear is that you stated that all income is included in the JSA assessment.

That is not true.

Actual income from a property that you do not live in is not included. Instead, a nominal value is calculated, based on the market value of the property (and often times well in excess of the actual income you can make from it after expenses).


Basically a person cannot have it both ways: either they live their, and rental income counts as income for Welfare, but they can avail of the rent-a-room tax relief. Or they don't live there, rental income is disregarded for Welfare, but is liable for tax, and the capital value of the house feeds into the Welfare formula.