Rent-a-room scheme while living abroad

nickmax

Hi, i would be extremely grateful for any advice. In July 2021 my wife and I moved from dublin to another country where we now work and pay tax. we had been availing of the rent a room scheme for a number of years and it has worked well. But we are worried about 2022. there is a lodger in the house now that is paying rent. we want to do things by the book as it were but obviously pay as little tax as possible. thanks in advance.

ari101

You no longer meet the criteria from rent a room relief.

As a non resident landlord you should be able to pay 20% tax in Ireland and, if there is a tax treaty with the country where you now are tax resident, hopefully get a tax deduction on whatever might be due there in the same amount.

You need to either appoint a resident agent to collect the rent and complete a return and pay revenue on your behalf. Or if the tenant pays you directly they are supposed to withhold 20% and pay that to revenue. Details at this link:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

nickmax

Amazing. This is extremely helpful. 20% tho yikes.

Mic 1972

Technically, unless both of you have a job in the new country, the one of you who isnt working could remain resident in Ireland and still avail of rent-a-room.

https://www.boards.ie/discussion/comment/118715439#Comment_118715439

Not true if they don't meet the residency criteria. Also rent a room is based on the property being your home for most of the year and where friends would expect to find you. Hard to tick that box if living abroad.

Yellow_Fern

There are two issues, tax and tenancy. You may be happy to pay tax, but it might be less acceptable for you, if the renter changes from licencee to tenant and you can no longer use your house.

nickmax

We are both working in the UK. I wish I had asked this question here in 2021… I’m going to do my best to read and understand the doc ari101 attached. I fear I may have more questions…

thanks tho!

nickmax

Ok that’s scary. But it’s unlikely to be a problem in our case.

Mic 1972

https://www.boards.ie/discussion/comment/118715465#Comment_118715465

The assumption is that one still remains registered as living in ireland. As a resident you are expected to spend 6 months + 1 day in ireland, nobody is going to check how much time you have actually spent in Ireland. Obviously it's not ideal to be exposed to tax evasion, especially if this provides leverage to the tenant in case of potential future dispute.

If however they both work, this is not a possible solution.