Rent a Room Tax Liability

Anastasia_

Hi all, not sure if this should be posted here or in Legal Discussion so feel free to move it.

My mum and I own a property as tenants in common with equal shares. I am planning on moving into the property and availing of the rent a room scheme as it is a four bed. Here is what I am not sure about -

Say we take €12,000 in rent. We are both entitled to €6,000, but is my mum entitled to avail of Rent a Room relief as it will not be her primary residence, or will she be taxed on it as rental income? From what I can gather there is no NPPR charge to be paid as long as one owner is resident, but I can't find much info on the Rent a Room scheme under coownership.

Any insights are greatly appreciated.

Cuddlesworth

Revenue tend not to mess around, so it would make sense that income to you is not liable for tax but income to your mother would be.

It would make more sense for your extra duty's in the house, with regards maintenance, management and bills for a higher split of the rent to go towards yourself, taking advantage of that tax free relief.

If you had a mortgage, you could use that additional income to bring down the capital, benefiting both owners.

Baby01032012

Anastasia_ wrote: »

Hi all, not sure if this should be posted here or in Legal Discussion so feel free to move it.

My mum and I own a property as tenants in common with equal shares. I am planning on moving into the property and availing of the rent a room scheme as it is a four bed. Here is what I am not sure about -

Say we take €12,000 in rent. We are both entitled to €6,000, but is my mum entitled to avail of Rent a Room relief as it will not be her primary residence, or will she be taxed on it as rental income? From what I can gather there is no NPPR charge to be paid as long as one owner is resident, but I can't find much info on the Rent a Room scheme under coownership.

Any insights are greatly appreciated.

Hi OP,

Firstly NPPR no longer exists. LPT replaces that and you and your mum will be liable for that anyway.

I note you are tenants in commen with equal shares however that relates to the ownership. You and your mum decide how you split the income between ye. Generally whoever is in receipt of the income declares it. So you could declare 12000 and claim rent a room relief on full amount. The person claiming does not need to own the property. For example, You could get a tenant, they could sublet and be entitled to claim rent a room relief too.
You could be liable for the gift of half the rent from your Mum though. Best to speak to an accountant before going ahead.

3DataModem

Poster above is correct. If you can demonstrate to revenue that you are benefitting from the entire 12k, then you can claim rent a room relief irrespective of ownership.

Anastasia_

Thanks everyone. If it is all paid into a bank account in joint names would there be any hassle?

3DataModem

Anastasia_ wrote: »

Thanks everyone. If it is all paid into a bank account in joint names would there be any hassle?

A tax advisor would suggest not doing this, and ensuring all the money goes into an account in the name of the person claiming relief.