Buy-to-let tax on rent greater than threshold.

Jesper

I have a large house with up to 3 rooms to rent. Im aware that I an earn €12,600 (?) Tax free as its my principle residence.
My question is if I earn €1 more than this amount am I accountable for rent on the full amount of just the sum over the tax relief amount. I.e. the house rents for €15,000 per year do I pay tax on the 15,000 or the €2,300?

Graham

Jesper wrote: »

I have a large house with up to 3 rooms to rent. Im aware that I an earn €12,600 (?) Tax free as its my principle residence.
My question is if I earn €1 more than this amount am I accountable for rent on the full amount of just the sum over the tax relief amount. I.e. the house rents for €15,000 per year do I pay tax on the 15,000 or the €2,300?

On the full amount:

where the gross income from rent-a-room lettings exceeds the exemption limit, the profits for the year in question are computed by reference to the gross income, not just on the amount by which that income exceeds the exemption limit.

http://www.revenue.ie/en/tax/it/leaflets/it70.html#section11

Jesper

Graham wrote: »

On the full amount:


http://www.revenue.ie/en/tax/it/leaflets/it70.html#section11

Thanks Graham. Seems a bit bizarre not to have some scale. If you go €5 over you could be taxed 6,000

Graham

Jesper wrote: »

Thanks Graham. Seems a bit bizarre not to have some scale. If you go €5 over you could be taxed 6,000

I guess the idea was to incentivise the addition of rooms to the rent-a-room market while limiting the distorting effect tax exemptions can cause.

If the exemption was made too large you would see family homes being re-purposed for large scale rent-a-room accommodation which could potentially see house prices pushed further upwards and families pushed further out.

the_syco

Graham wrote: »

On the full amount:

where the gross income from rent-a-room lettings exceeds the exemption limit, the profits for the year in question are computed by reference to the gross income, not just on the amount by which that income exceeds the exemption limit.

http://www.revenue.ie/en/tax/it/leaflets/it70.html#section11

So it may work out cheaper for the landlord to offer an xmas discount if the gross income gets close to the exemption limit?

athtrasna

Also bear in mind that the threshold is for all payments received from the licensees and not just rent but also for any bills

riclad

Simply reduce your rent to 11,900 or reduce the no of tenants you have .
You,ll have to work it out ,50 weeks rent = 11,900.

athtrasna

riclad wrote: »

Simply reduce your rent to 11,900 or reduce the no of tenants you have .
You,ll have to work it out ,50 weeks rent = 11,900.

That's assuming bills are included