Definition of Primary Residence + rent a room

CertifiedSimp

Howdy all. Have had a discussion on another thread about this and there's conflicting information regarding my own knowledge on the matter.

Theoretical scenario is this:

- I buy a property to live in.
- I rent out a room under rent a room scheme.
- Maybe a couple years later I move to another location, rent/move home or whatever.
- I rent out the other room that I was in.
- All bills etc. stay in my name, income remains below the 14,400 for rent a room scheme.

The definition of primary residence is unclear. No definition based on number of nights slept there or anything.

From some irish tax company websites there's lots of mentions about if you have two propertys you have to "choose" your main residence.

Also others claimed they would be tenants and could report to the RTB. I claim they can't be, because they're licensees as all bills would be in my name + registered for rent a room.

What are your thoughts as it looks from what I see that you define your main residence yourself?

Samuel T. Cogley

As per the guidelines, it's where you're expected to be found. So if you've moved to another house, the new house is your PPR. Now assuming you genuinely split time between locations I'd say the majority wins out and if you're in one over the 183 days (or what ever it is) for tax purposes I'd say the revenue would have an even stronger case for saying it was your PPR.

The fact that your bills go somewhere does not make it a PPR imho.

Gumbo

CertifiedSimp wrote: »

Howdy all. Have had a discussion on another thread about this and there's conflicting information regarding my own knowledge on the matter.

Theoretical scenario is this:

- I buy a property to live in.
- I rent out a room under rent a room scheme.
- Maybe a couple years later I move to another location, rent/move home or whatever.
- I rent out the other room that I was in.
- All bills etc. stay in my name, income remains below the 14,400 for rent a room scheme.

The definition of primary residence is unclear. No definition based on number of nights slept there or anything.

From some irish tax company websites there's lots of mentions about if you have two propertys you have to "choose" your main residence.

Also others claimed they would be tenants and could report to the RTB. I claim they can't be, because they're licensees as all bills would be in my name + registered for rent a room.

What are your thoughts as it looks from what I see that you define your main residence yourself?

If you say it’s your PPR, yet are living in the new house you built separately (as per your other thread) then it’s fraud and illegal.

You cannot claim rent a room on the original house and the occupiers become tenants.

Gumbo

From Revenue Site

A PPR is a house or apartment which you own and occupy as your only or main residence

awec

Not sure how this is even a question, it's fairly straightforward.

Once you move out of the original house then it's no longer your PPR, you can no longer avail of rent a room on it, and anyone you rent it to is a tenant with full tenancy rights.

CertifiedSimp

Samuel T. Cogley wrote: »

As per the guidelines, it's where you're expected to be found. So if you've moved to another house, the new house is your PPR. Now assuming you genuinely split time between locations I'd say the majority wins out and if you're in one over the 183 days (or what ever it is) for tax purposes I'd say the revenue would have an even stronger case for saying it was your PPR.

The fact that your bills go somewhere does not make it a PPR imho.

Can you link me to the guidelines that say this?

There is no mention of 183 days anywhere on revenue.

CertifiedSimp

awec wrote: »

Not sure how this is even a question, it's fairly straightforward.

Once you move out of the original house then it's no longer your PPR, you can no longer avail of rent a room on it, and anyone you rent it to is a tenant with full tenancy rights.

Definition of PPR is not clear though.

awec

CertifiedSimp wrote: »

Definition of PPR is not clear though.

It's fairly clear.

If you don't live there, it's not your primary residence. You will have a hard time convincing anyone on here, or anyone in Revenue, that somewhere you do not reside is your primary residence. Even typing it out here sounds stupid.

Samuel T. Cogley

CertifiedSimp wrote: »

Can you link me to the guidelines that say this?

There is no mention of 183 days anywhere on revenue.

What type of residence qualifies?
Sole or main residence
Your main residence is your home for most of the year and where friends would expect to find you. You do not have to own the property to claim relief.

The room or rooms must be in a residential property that is located in Ireland. You must use it as your main residence during the tax year.

Apologies a bit of paraphrasing on my part, or something I've read else where but the above is the guidance from the revenue web site.

The 183 days (or whatever it is) is just the number of days before you're considered tax resident. I'm simply saying that if you're in the 'other' residence' at least that long, I'd say revenue have a strong case for saying it's your PPR.

CertifiedSimp

awec wrote: »

It's fairly clear.

If you don't live there, it's not your primary residence. You will have a hard time convincing anyone on here, or anyone in Revenue, that somewhere you do not reside is your primary residence. Even typing it out here sounds stupid.

Why couldn't it?

Are you telling me lads who work up the country for 5 days a week and come back to their house at weekends are not living in their main residence?

awec

CertifiedSimp wrote: »

Why couldn't it?

Are you telling me lads who work up the country for 5 days a week and come back to their house at weekends are not living in their main residence?

They are, but their main residence is not their house that they spend weekends in, as evidenced by the fact they don't reside there the majority of the time.

CertifiedSimp

Samuel T. Cogley wrote: »

Apologies a bit of paraphrasing on my part, or something I've read else where but the above is the guidance from the revenue web site.

The 183 days (or whatever it is) is just the number of days before you're considered tax resident. I'm simply saying that if you're in the 'other' residence' at least that long, I'd say revenue have a strong case for saying it's your PPR.

Have you got a link about where it says about where friends find you?

They'd expect to find me in my main residence because that's my main residence. And what if someone has no friends?



And if someone works in Dublin 5 days a week staying in B&B are you telling me if they sold their house it wouldn't be exempt from CGT? I find this highly doubtful.

CertifiedSimp

awec wrote: »

They are, but their main residence is not their house that they spend weekends in, as evidenced by the fact they don't reside there the majority of the time.

So any lad who did that and then sold their primary house paid CGT on it?

I highly doubt that.

Sarn

CertifiedSimp wrote: »

Why couldn't it?

Are you telling me lads who work up the country for 5 days a week and come back to their house at weekends are not living in their main residence?

I would imagine this would be more of a grey area, however, they would still be residing in their house. The understanding is that you rent out a spare room, if you rent your bedroom to someone that is not a spare room.

Samuel T. Cogley

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/what-type-of-residence-qualifies.aspx

Very few people win when challenging the Revenue from what I understand. One's main concern wouldn't be that Revenue would catch up with you, it's a claim to the RTB that someone living in your 'Is my PPR but isn't really' property claims they are a de facto tenant.

Gumbo

CertifiedSimp wrote: »

Have you got a link about where it says about where friends find you?

.

Here you go.

Sole or main residence
Your main residence is your home for most of the year and where friends would expect to find you. You do not have to own the property to claim relief.

The room or rooms must be in a residential property that is located in Ireland. You must use it as your main residence during the tax year.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/what-type-of-residence-qualifies.aspx

Gumbo

CertifiedSimp wrote: »

And if someone works in Dublin 5 days a week staying in B&B are you telling me if they sold their house it wouldn't be exempt from CGT? I find this highly doubtful.

This is different.
The lad working 5 days a week in Dublin doesn’t reside in a B&B. That is not their home and would not get post, deliveries, bills, legal documents sent to a B&B.

CertifiedSimp

Gumbo wrote: »

Here you go.



https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/what-type-of-residence-qualifies.aspx

That gives the definition for main residence but not for sole, which I have just found.

https://www.revenue.ie/en/property/living-city-initiative/lci-definitions.aspx

Your sole or main residence is the property which you live in, or which you have chosen as your main home.

If you have two residences, you must choose one residence to be your main residence. You must notify Revenue of your choice in writing. This may affect your tax situation, particularly in the case of Principal Private Residence Relief.

This clears things up perfectly. You choose what your PPR is. Otherwise they would say, the property you live in for majority of the year or give a number of days required to live there.

awec

This still does not mean you can claim rent a room relief on it, and that anyone you rent it to is a licensee. The idea is totally daft.

If you don't live there you cannot. The rules on rent a room are clear.

Your main residence is your home for most of the year and where friends would expect to find you.

CertifiedSimp

awec wrote: »

This still does not mean you can claim rent a room relief on it, and that anyone you rent it to is a licensee. The idea is totally daft.

If you don't live there you cannot. The rules on rent a room are clear.

I think it does.

If it's my PPR, no lease agreement, no bills etc in tenants name how can they be tenants?

awec

CertifiedSimp wrote: »

I think it does.

If it's my PPR, no lease agreement, no bills etc in tenants name how can they be tenants?

You don't live there. They are tenants.

Bills in their name is of no relevance whatsoever. It doesn't matter if you got every bill you have delivered there, if you don't live there it's not your main residence and therefore not eligible for rent a room relief.

awec

awec wrote: »

They are, but their main residence is not their house that they spend weekends in, as evidenced by the fact they don't reside there the majority of the time.

If you are actually spending time in both houses it would be fairly easy to claim one or the other as primary residence (just a matter of playing around with the number of days you spend in each on paper - very hard to actually prove). Plenty of people are renting rooms out in one house they live in during the week and have another house where their family lives etc.

If you never spend any time at all in it then that’s a different story and it’s obviously not rent a room.

CertifiedSimp

awec wrote: »

You don't live there. They are tenants.

Bills in their name is of no relevance whatsoever.

How does anyone know where anyone sleeps the majority of the time?

Browney7

CertifiedSimp wrote: »

I think it does.

If it's my PPR, no lease agreement, no bills etc in tenants name how can they be tenants?

If it's a 2 bed property and you've rented the two rooms out I'd expect the tenants can go to the RTB after some time to adjudicate they do indeed have a defacto tenancy even though you've tried to structure that you don't. If you keep a room for yourself you might have some hope.

If you buy an alternate property and live in it but claim the other as your PPR you're opening up CGT considerations also.

Samuel T. Cogley

Chosen does not necessarily mean you make a conscious decision. You can choose by doing.

awec

CertifiedSimp wrote: »

How does anyone know where anyone sleeps the majority of the time?

Well if you have a 2 bed property, and you have rented out both rooms, and you are claiming rent a room relief, it is pretty obvious that you don't live there.

Unless you're going to try and claim that you live there and sleep on the sofa every night. :rolleyes:

Samuel T. Cogley

CertifiedSimp wrote: »

I think it does.

If it's my PPR, no lease agreement, no bills etc in tenants name how can they be tenants?

The RTB find people to be tenants all the time.

As for where you sleep, the RTB will take testimony from both parties and it is entirely within their remit to decide who they believe.

CertifiedSimp

Browney7 wrote: »

If it's a 2 bed property and you've rented the two rooms out I'd expect the tenants can go to the RTB after some time to adjudicate they do indeed have a defacto tenancy even though you've tried to structure that you don't. If you keep a room for yourself you might have some hope.

If you buy an alternate property and live in it but claim the other as your PPR you're opening up CGT considerations also.

I could just rent it to a couple then and leave one room free.

Surprised the amount of pushback on this, I know a couple people who have been renting out their PPR and living elsewhere and getting paid 20k+ a year into their bank accounts and nothing has been said. And that's going on nearly a decade now. And they aren't even registered on the rent a room.

Samuel T. Cogley

CertifiedSimp wrote: »

I could just rent it to a couple then and leave one room free.

Surprised the amount of pushback on this, I know a couple people who have been renting out their PPR and living elsewhere and getting paid 20k+ a year into their bank accounts and nothing has been said. And that's going on nearly a decade now. And they aren't even registered on the rent a room.

Many of us don't like people who commit tax fraud, funny I know.

Browney7

CertifiedSimp wrote: »

I could just rent it to a couple then and leave one room free.

Surprised the amount of pushback on this, I know a couple people who have been renting out their PPR and living elsewhere and getting paid 20k+ a year into their bank accounts and nothing has been said. And that's going on nearly a decade now. And they aren't even registered on the rent a room.

If people are choosing to flout taxation law that's their business and in the event (albeit maybe unlikely) that they receive an audit or revenue come knocking, they may be in for a world of hurt.

You'd also be potentially somewhat hostage to this couple if you ever fell out and they had the sword of Damocles hanging over you with a "I'll grass to the revenue on you...".

What you choose to do is up to you - it's your business at the end of the day

mrslancaster

awec wrote: »

Well if you have a 2 bed property, and you have rented out both rooms, and you are claiming rent a room relief, it is pretty obvious that you don't live there.

Unless you're going to try and claim that you live there and sleep on the sofa every night. :rolleyes:

That's not unheard of. people sleep on sofa-beds.

CertifiedSimp

Browney7 wrote: »

If people are choosing to flout taxation law that's their business and in the event (albeit maybe unlikely) that they receive an audit or revenue come knocking, they may be in for a world of hurt.

You'd also be potentially somewhat hostage to this couple if you ever fell out and they had the sword of Damocles hanging over you with a "I'll grass to the revenue on you...".

What you choose to do is up to you - it's your business at the end of the day

Well my plan would be to be a good "landlord". Rent would probably be below market rate too.

CIARAN_BOYLE

CertifiedSimp wrote: »

I could just rent it to a couple then and leave one room free.

Surprised the amount of pushback on this, I know a couple people who have been renting out their PPR and living elsewhere and getting paid 20k+ a year into their bank accounts and nothing has been said. And that's going on nearly a decade now. And they aren't even registered on the rent a room.

We're strangers on the internet. We wont advise you to break the law.

If my best friend was in your position I might give a speech about the chances of being caught, all it takes is one unhappy licensee. The likely consequences from a tax perspective and from a control of your own home perspective. But we wont advice illegal actions here.

Just the same as we wont advise to rape or murder.

Sarn

CertifiedSimp wrote: »

I could just rent it to a couple then and leave one room free.

Surprised the amount of pushback on this, I know a couple people who have been renting out their PPR and living elsewhere and getting paid 20k+ a year into their bank accounts and nothing has been said. And that's going on nearly a decade now. And they aren't even registered on the rent a room.

If they’re pulling in over €14k then it’s not under the rent a room relief.

CertifiedSimp

Sarn wrote: »

If they’re pulling in over €14k then it’s not under the rent a room relief.

Yes I know which is far more clear and dodgy than what I am saying and they've been at it nearly a decade now.

Samuel T. Cogley

CertifiedSimp wrote: »

Well my plan would be to be a good "landlord". Rent would probably be below market rate too.

No matter how good a LL you are it's easy enough to get landed with a delinquent tenant. You're then going to try and put them out with little to no notice as you consider them a licencee. That's when you're potentially going to end up with an RTB adjudication that they were in fact a tenant, possibly be ordered to take the tenant back and landed with a compensation bill.

CertifiedSimp

Samuel T. Cogley wrote: »

No matter how good a LL you are it's easy enough to get landed with a delinquent tenant. You're then going to try and put them out with little to no notice as you consider them a licencee. That's when you're potentially going to end up with an RTB adjudication that they were in fact a tenant, possibly be ordered to take the tenant back and landed with a compensation bill.

How many delinquent tenants are there?

I have rented and subleased for years and years and i've never had any trouble.

Vast vast majority of people are good people and know they have to pay.

And if there were any bad tenants trying to shaft me i would simply move back in and would force them out as I'd be the owner occupier.

Samuel T. Cogley

CertifiedSimp wrote: »

How many delinquent tenants are there?

I think it worked out to about 1 in 100

CertifiedSimp wrote: »

I have rented and subleased for years and years and i've never had any trouble.

Vast vast majority of people are good people and know they have to pay.

Mostly that's going to be your experience, thankfully. However it only takes one.

CertifiedSimp wrote: »

And if there were any bad tenants trying to shaft me i would simply move back in and would force them out as I'd be the owner occupier.

See this is why me and others are trying to warn you about gaming the system. It doesn't work that way.

You obviously have decided on your course of action, I'm not sure why you felt the need to try and justify it or gain the approval of a bunch of randomers on the interwebz.

awec

CertifiedSimp wrote: »

How many delinquent tenants are there?

I have rented and subleased for years and years and i've never had any trouble.

Vast vast majority of people are good people and know they have to pay.

And if there were any bad tenants trying to shaft me i would simply move back in and would force them out as I'd be the owner occupier.

OP, you clearly have a very weak understanding of the processes and regulations here. I would suggest you go get some proper advice before doing what you're talking about.

Once you move out, your renters are tenants, not licensees. This is a fact, and irrefutable. Any attempt to suggest otherwise will be laughed out.

You cannot then simply move back in. You can evict tenants in order to reclaim the property for your own use, or for the use by a family member, but you must sign a statutory declaration indicating that this is your intention, and you must say how long you'll need it for. If you try rent again within a year, you must offer it back to your previous tenants.

You cannot decide that you're just going to move back in without evicting the current tenants and sleep on the sofa. Your tenants can, and will challenge this, and they will win.

Without understanding this stuff, the end result is your tenants are going to end up with some nice compensation for your incompetence.

davindub

CertifiedSimp wrote: »

That gives the definition for main residence but not for sole, which I have just found.

https://www.revenue.ie/en/property/living-city-initiative/lci-definitions.aspx



This clears things up perfectly. You choose what your PPR is. Otherwise they would say, the property you live in for majority of the year or give a number of days required to live there.

That definition belongs to the living city initiative.

CertifiedSimp

davindub wrote: »

That definition belongs to the living city initiative.

Seems hard to believe there's different definitions of sole residence.

A lot of tax companies don't believe it's very clear either.

Brego888

I'm always curious to find out how the revenue would find this out? Is it only through a random audit?

CertifiedSimp

Brego888 wrote: »

I'm always curious to find out how the revenue would find this out? Is it only through a random audit?

Would also like to know this considering there doesn't seem to be any auto alerts when X amount is lodged in an account.

endacl

CertifiedSimp wrote: »

The definition of primary residence is unclear.

No it’s not .

Allinall

CertifiedSimp wrote: »

Would also like to know this considering there doesn't seem to be any auto alerts when X amount is lodged in an account.

It can come to their attention through numerous ways:

You could be randomly selected for audit.
Your bank could be audited.
Your bank could report what they believe to be suspicious transactions.
Any of your tenants/ licencees could be audited.
Any of your tenants/ licencees could report you.
Any of your neighbours could report you.

Gumbo

CertifiedSimp wrote: »

Well my plan would be to be a good "landlord". Rent would probably be below market rate too.

Landlord has tenants.
Market rate relates to tenancies.

Looks like you’ve answered your own question here.

C3PO

I don't know why you keep coming back on this one OP - legally your position is untenable!
While, the chances are that you would get away with what you are proposing, I would be willing to make a significant bet that both the Revenue or the RTB would find against you if it came down to it!

CertifiedSimp

Gumbo wrote: »

Landlord has tenants.
Market rate relates to tenancies.

Looks like you’ve answered your own question here.

That's why I put landlord in "".

DubCount

CertifiedSimp wrote: »

That's why I put landlord in "".

I don't think you are proposing "tax evasion" - I think its just tax evasion. The rules are clear. Your PPR for the purpose of Rent-a-room is where you live, where someone would expect to find you most of the time. Revenue and the RTB wont give credit for being a nice "Landlord". If you are confident you are have invested a new tax loophole, go call up Revenue for an opinion.

Gumbo

CertifiedSimp wrote: »

That's why I put landlord in "".

Ohh, ok then. Then you “are not” committing tax evasion....... :rolleyes:

CertifiedSimp

Thanks all, got the answers I needed.

Mods can lock the thread now.