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Rent a room Vs Regular Letting

  • 08-05-2018 9:14am
    #1
    HappyAsLarE
    Closed Accounts Posts: 771 ✭✭✭


    Hi,

    Am I missing something here...?

    Let’s say someone wishes to let their house out for approx 8k per year. They will be liable for rental income tax on the profit (8k minus mortgage interest). This tax liability coming in at about 2k a year

    However, if they stay in the house and rent a room they are totally exempt from income tax?


Comments

  • #2
    gerrybbadd
    Registered Users, Registered Users 2 Posts: 10,301 ✭✭✭✭gerrybbadd


    HappyAsLarE wrote: »
    Hi,

    Am I missing something here...?

    Let’s say someone wishes to let their house out for approx 8k per year. They will be liable for rental income tax on the profit (8k minus mortgage interest). This tax liability coming in at about 2k a year

    However, if they stay in the house and rent a room they are totally exempt from income tax?

    Not totally exempt, there's a limit to the amount of rent a room income you can have. And although exempt, it's meant to be declared.

    And regarding the rental income tax, it's 75% of the mortgage interest, with the caveat that you must be PRTB registered. If you aren't, Mortgage interest is not deducible


  • #3
    Bobby1984
    Registered Users, Registered Users 2 Posts: 269 ✭✭Bobby1984


    The only thing to be wary of is the difference between rent a room relief (not taxable, but must be declared) which is for long term tenancy and short term lettings (taxable under Case IV unless it is a business) such as Air B&B.

    Not wanting to be pedantic but the allowable mortgage interest has been increased to 80% for 2017.


  • #4
    gerrybbadd
    Registered Users, Registered Users 2 Posts: 10,301 ✭✭✭✭gerrybbadd


    Bobby1984 wrote: »
    The only thing to be wary of is the difference between rent a room relief (not taxable, but must be declared) which is for long term tenancy and short term lettings (taxable under Case IV unless it is a business) such as Air B&B.

    Not wanting to be pedantic but the allowable mortgage interest has been increased to 80% for 2017.

    Thanks, wasn't aware of that


  • #5
    josephsoap
    Registered Users, Registered Users 2 Posts: 657 ✭✭✭josephsoap


    Bobby1984 wrote: »
    The only thing to be wary of is the difference between rent a room relief (not taxable, but must be declared) which is for long term tenancy and short term lettings (taxable under Case IV unless it is a business) such as Air B&B.

    Not wanting to be pedantic but the allowable mortgage interest has been increased to 80% for 2017.

    I would have presumed income from air B and B would come under Case I on a form 11 ?


  • #6
    Bobby1984
    Registered Users, Registered Users 2 Posts: 269 ✭✭Bobby1984


    josephsoap wrote: »
    I would have presumed income from air B and B would come under Case I on a form 11 ?

    I was kind of assuming that it was the odd night here and there. If it is a regular thing and seen more as a "trade" then yes I'd agreed on it being Case 1


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