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Rent a room - mortgage

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  • 19-12-2020 10:09am
    #1
    Happyhouse22
    Registered Users Posts: 453 ✭✭


    Friend A owns a three bedroom house, lives alone and could so with help with mortgage.

    Friend B and Friend C, rent together and are saving for a mortgage.

    Plan is for friend B and C to move in with Friend A, Friend A can avail of the rent a room scheme up to 14,000 and friends b and c will benefit from cheaper rent than they are currently paying.

    Any issues with this plan? Will paying less rent affect B and C’s mortgage application? Will the lack of a rental contract, registration with RTB etc be viewed negatively?


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    #2
    celtic_oz
    Registered Users Posts: 1,548 ✭✭✭celtic_oz


    Happyhouse22 wrote: »
    Will paying less rent affect B and C’s mortgage application? Will the lack of a rental contract, registration with RTB etc be viewed negatively?

    No
    Happyhouse22 wrote: »
    Any issues

    The total amount B and C pay in the house must be less than €584 each per month INCLUDING ALL BILLS (ESB, SKY, BINS, WATER, OIL)

    if A asks for one more cent than 14,000 he/she will lose €7,000


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    #3
    Happyhouse22
    Registered Users Posts: 453 ✭✭Happyhouse22


    celtic_oz wrote: »
    No



    The total amount B and C pay in the house must be less than €584 each per month INCLUDING ALL BILLS (ESB, SKY, BINS, WATER, OIL)

    if A asks for one more cent than 14,000 he/she will lose €7,000

    I didn’t know that all bills had to come below the amount also.. what if the leasee (is that a word?) decides to get sky themselves (with permission obviously) - then they would pay the sky bill, in their own names. Presume that wouldn’t affect the 584 each month?


    Also I presume the 14,000 is from January to December. If for example the lease(s) were from March 1st 2021 to October 1st 2022 then a higher amount would be ok each month (700)


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    #4
    Zenify
    Registered Users Posts: 861 ✭✭✭Zenify


    no problem at all.

    rent a room lso doesn't fall under the RTB (i think)

    Friend A is supposed to declare the income to revenue which most people don't. still no tax under 14k but they want to know about it.


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    #5
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Happyhouse22 wrote: »
    I didn’t know that all bills had to come below the amount also.. what if the leasee (is that a word?) decides to get sky themselves (with permission obviously) - then they would pay the sky bill, in their own names. Presume that wouldn’t affect the 584 each month?

    I wouldn't presume that. I'd keep it all under the 14K.

    Happyhouse22 wrote: »
    Also I presume the 14,000 is from January to December. If for example the lease(s) were from March 1st 2021 to October 1st 2022 then a higher amount would be ok each month (700)

    Yes that's fine but don't go a cent over 14K and make sure to declare it.


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    #6
    Mrs OBumble
    Registered Users Posts: 25,683 ✭✭✭✭Mrs OBumble


    Samuel T. Cogley wrote: »
    I wouldn't presume that. I'd keep it all under the 14K.

    Silly statement.

    The amount of cash transferred from B and C must be less than 14k.

    Apart from that, B and C can spend their money on anything they like: food, clothing, mobile broadband, magazine subscriptions, Sky.

    Now, via they share that food, clothing, etc with A then it might have gift duty implications. But you can give someone up to a certain amount (3k I think) per year tax free.


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    #7
    Happyhouse22
    Registered Users Posts: 453 ✭✭Happyhouse22


    Mrs OBumble wrote: »
    Silly statement.

    The amount of cash transferred from B and C must be less than 14k.

    Apart from that, B and C can spend their money on anything they like: food, clothing, mobile broadband, magazine subscriptions, Sky.

    Now, via they share that food, clothing, etc with A then it might have gift duty implications. But you can give someone up to a certain amount (3k I think) per year tax free.

    Interesting interpretation..

    I don’t believe that someone purchasing their own sky subscription would be an issue but it can’t be as easy as B and C paying all the bills and gifting the use of them to A. For an example paying 1,100 a month in rent and then another 200 a month as a random gift sure.y wouldn’t be allowed...

    But then what about greyer areas, e.g. b and c doing most of the food shopping, b and c maintaining the garden for A - how would these be classified.


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    #8
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Mrs OBumble wrote: »
    Silly statement.

    The amount of cash transferred from B and C must be less than 14k.

    Apart from that, B and C can spend their money on anything they like: food, clothing, mobile broadband, magazine subscriptions, Sky.

    Now, via they share that food, clothing, etc with A then it might have gift duty implications. But you can give someone up to a certain amount (3k I think) per year tax free.

    If that were the case then you'd simply put the electricity etc. in the tenants name to get around the 14K limit. I'd err on the side of caution for something that could be construed as a household bill. A magazine subscription or mobile contract is a personal bill.


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    #9
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Happyhouse22 wrote: »
    But then what about greyer areas, e.g. b and c doing most of the food shopping, b and c maintaining the garden for A - how would these be classified.

    Funnily enough one of the examples given by Revenue is the provision of meals, again I'd err on the side of caution if combining food budgets, but that would be pretty rare in fairness.


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    #10
    Klonker
    Registered Users Posts: 1,667 ✭✭✭Klonker


    Happyhouse22 wrote: »

    Also I presume the 14,000 is from January to December. If for example the lease(s) were from March 1st 2021 to October 1st 2022 then a higher amount would be ok each month (700)

    The relief is not pro rata. So taking your example, the owner could charge up to 14k for March to December 2021 and 14k for January to October 2022 as long as received no other rent in those years.


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    #11
    Buddy Bubs
    Registered Users Posts: 3,461 ✭✭✭Buddy Bubs


    Jeez guys you've over complicated this. Yes, OP, its a good idea once the amount received by homeowner is under 14k per year. Only possible downside is a breakdown in friendship if they find they are not compatible living under same roof.


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    #12
    Buddy Bubs
    Registered Users Posts: 3,461 ✭✭✭Buddy Bubs


    Happyhouse22 wrote: »
    I didn’t know that all bills had to come below the amount also.. what if the leasee (is that a word?) decides to get sky themselves (with permission obviously) - then they would pay the sky bill, in their own names. Presume that wouldn’t affect the 584 each month?


    Also I presume the 14,000 is from January to December. If for example the lease(s) were from March 1st 2021 to October 1st 2022 then a higher amount would be ok each month (700)

    If he/she charges 700 a month to each tenant then they're probably not a great friend! But back to Financials, if they charge 700 a month they are going to run into tax bills in the second year if it runs for the full year. Remember that its tax free money too. If your friend earns over 35k then it would take a wage increase of 2k a month in order to get 1k in their pocket.

    The cap is probably high enough for your friend A to make a tidy sum since living with 2 friends, unless the house is extraordinary in some way and worth a fortune to live there.


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