Bills included in rent a rooms scheme

defiantdancer

hello there,
I have a friend who in dire financial straits and will probably lose her job imminently through no fault of her own.US company pulling out of Ireland. I have suggested the rent a room scheme to her. I know you can earn up to €14,000 tax free. However, does that include money paid by the lodger towards elec & WI-FI? She just wants to make sure that everything is above board and fair to the person who will be renting from her.

spockety

https://www.boards.ie/discussion/2058378457/bills-included-in-rent-a-rooms-scheme

I'd imagine it does include all income related to the rental of the room. If she was charging 14K a year for rent alone, then if you think about it, the income she would derive from charging people for things like energy, bins, etc., would be taxable.

Peregrinus

Yup. Any amount the lodger pays by way of contribution towards the homeowner's utilities, etc, is regarded by Revenue as included in the income the homeowner derives by renting out the room, so it counts towards the €14k cap.

defiantdancer

thank you both for your help. We are both clueless about this and I am really worried for my friend. I am not in a financial position to help her as my job isn’t well paid either but at least I can suggest this option to her and help her get the room ready. I am good at cleaning & home decor -home economics but not economics unfortunately!

harryharry25

https://www.boards.ie/discussion/comment/122779302#Comment_122779302

€1,166 to rent one room in a house tax free.

What kind of house is it and where?

A quick look on daft in Dublin and the first 20 rooms listed only 2 are above €1000 a month

As bad as rent prices are, you wouldn't get close to 1,000 a month for a room in most places

kirving

https://www.boards.ie/discussion/comment/122779284#Comment_122779284

Say I'm renting a room, and for arguments sake pay a total of €14,000 per year.

If say oil comes to another €2000 per year, and I split it evenly with the homeowner, should they be paying tax on my €1000 contribution? What if I paid for one €1000 oil delivery, and they paid another?

I know that's getting into the weeds, and some homeowner cost (like TV license and gardening) are fixed whether there is a tenant or not, but others (say if tenant wanted Sky Sports, electricity for showers) are variable.

Claw Hammer

https://www.boards.ie/discussion/comment/122779412#Comment_122779412

If you pay 14k a year and pay a cent more top the homeowner for anything, the whole lot (including the 14k) is taxed not just the excess over 14k.

POBox19

Anyone contemplating the scheme would need to read the Revenue's advice for the scheme:

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/index.aspx

If the income exceeds €14k then the total income is taxable.

defiantdancer

it’s a really old house and I don’t think she would feel comfortable charging anybody that much😳the room would definitely need to be done up beforehand. Am sitting here thinking, am gutted the 20 percent is finished in Woodies,I could have got some paint!

batistuta9

where does it state that paying for utilities is included?

all that's listed is rent or room income, wouldn't class utilities in that. there's an example about paying for meals but that's different again, more a service.

Daxve

https://www.boards.ie/discussion/comment/122779832#Comment_122779832

The legislation (Section 216A TCA 1997) has the definition of what's included

“relevant sums” means all sums arising in respect of the use for the purposes of residential accommodation, of a room or rooms in a qualifying residence and includes sums arising in respect of meals, cleaning, laundry and other similar goods and services which are incidentally supplied in connection with that use;

extra-ordinary_

https://www.boards.ie/discussion/comment/122779832#Comment_122779832

If the lodger contributes to the energy/utility bills as well as paying rent then all must be under 14kpa to be tax free.

Many rooms are advertised as "rent includes all bills" although can't see how this is of any benefit to the house owner.

batistuta9

https://www.boards.ie/discussion/comment/122779855#Comment_122779855

still don't think that means utilities. sounds more like a digs or students type setup

no harm asking revenue anyway

batistuta9

https://www.boards.ie/discussion/comment/122779865#Comment_122779865

where did you see that stated?

DFB-D

https://www.boards.ie/discussion/comment/122779855#Comment_122779855

That term relates to services provided by the landlord - it clarifies services and goods which are "similar" rather than "all" services incidentally provided.

The question should be whether electricity is an expense of providing the accommodation (there is a term relating to expenses).

You can argue eitherway, but contact Revenue to clarify their position.

Peregrinus

https://www.boards.ie/discussion/comment/122779865#Comment_122779865

Makes the deal more attractive to prospective lodgers — it's an all-in deal, you know the total you have to pay, no hidden or variable extras, etc.

Plus, traditionally it was the norm that the price includes utilities — a lodger didn't expect to have to pay extra to turn on the light, plug in an appliance, run a bath, turn on the radiator. These things are normal incidents of being an occupant of thehouse, and so were included in the rent.

(Which is part of the reason why, if you do break them out and charge them separately to the lodger, I'm pretty sure the Revenue will take the view that this is just a component of the rent by another name.)

mondeoman72

Rent a room Income upto 14000 is tax free. If the income is 14001 euro or more, then the ENTIRE sum is taxed.

Victor

https://www.boards.ie/discussion/comment/122779371#Comment_122779371

The €1,000 per month wouldn't include utilities or other incidential costs.

Would she not take in a Ukrainian? 800 a month currently and she can charge for utilities. All tax free

3DataModem

OP, just tell your friend that the MAX she can get from their lodger (or any combination of lodgers in rooms) for any aspect of their stay is 14000 per annum, and that going over that makes the whole 14000 liable for tax.

If she has a spare room or two it's a great way to make cash in circumstances like hers.

J_1980

you can get a non-Ukrainian for 1150 per month and an Ukrainian for 800 per month together fully tax free in 2 rooms.

if your fried is losing the job, it won’t matter anyway as rental taxation without any working income (ie the only income) is likely zero anyway.

tvjunki

https://www.boards.ie/discussion/comment/122781636#Comment_122781636

I think she has to commit to 6 months and that might get her over a barrel until she finds another job.

herbalplants

https://www.boards.ie/discussion/2058378457/bills-included-in-rent-a-rooms-scheme

Sorry to hear about your friend. Curios which US company is pulling out of Ireland?

Definitely 14k a year includes bills

Claw Hammer

https://www.boards.ie/discussion/comment/122779998#Comment_122779998

The Revenue don't give comfort letters. Argue either way. Appeal an assessment and go before an Appeals Commissioner? This is the real world!
If someone pays for electricitry that they actually used it means that the landlord has incurred an expense of that amount in letting the accommodation. Expenses are not deductible so it is income in the landlords hands. If they pay more money that they actually used it is profit, pure and simple.
Either way it is going to be held to be gross income. taking in more than 14k and arguing some of it is accounted for utilities is a mugs game. If the inspector or the Appeals Commissioner doesn't agree it means a tax bill of &K per tax year in which it occurred. Only a lunatic would do such a thing.

DFB-D

https://www.boards.ie/discussion/comment/122786203#Comment_122786203

You think you live in the real world clawbladder? Keen Diy'er turned tax expert 😂

"my enquiries", if you ever get yourself cleaned up and have more than your dole, you might use this service Revenue provides to all taxpayers. I submit queries in relation to clients using this service probably 2 or 3 times a year using ROS, but it is available on Revenue.ie

Finally, do try to understand & speak English a bit better! I actually would have to correct your post to understand it, maybe if you do so, I will provide you with an answer, but only if I believe you are sober (I currently do not due to the many spelling mistakes and use of improper English).

Claw Hammer

https://www.boards.ie/discussion/comment/122786597#Comment_122786597

Usual abuse rather than engagement. You claim not to be a solicitor but give legal advice anyway. Good luck trying to get an answer on my enquiries and good luck trying to rely on it when an assessment is made saying otherwise.

DFB-D

https://www.boards.ie/discussion/comment/122787113#Comment_122787113

Yes, one can rely on "my enquiries" to clarify revenue's position on a subject.

I do not provide "legal advice" which would normally be provided by a solicitor if that is what you are alleging.

Marcusm

https://www.boards.ie/discussion/comment/122786597#Comment_122786597

if you are in receipt of income from these clients then you should consider notifying any professional indemnity insurance provider. MyEnquiries is not a source of advice from Revenue - for that you would have to engage with Revenue Technical Services. A lodger does not have a contract with any service provider so any contribution received purportedly in connection with electricity or other utilities is mutatis mutandis undifferenciable from the rent they pay and would be regarded as a component of it for the purposes of rent a room relief. There is no separate service provided and certainly not one which can be severed from the provision of accommodation. I find the other poster as regularly irritating as you do; however, in the circumstances they are absolutely correct and, if you are engaging with these “clients” on a paying basis, you are certainly failing to fulfil your duty of care.

DFB-D

https://www.boards.ie/discussion/comment/122788995#Comment_122788995

I am fully compliant with the criteria of the two bodies where I hold membership.

CH was deliberately incorrect in providing his rant in response to my post, If you read my post, I stated "you can argue either way but contact Revenue for their position" - which you should read as "arguments here are futile - Revenue already have their position determined".

"Myenquiries" is actually the initial contact for the technical team, if so required.

I utterly reject your assertion about failing my duty of care to my clients, you have no reason to allege this. I believe CH trys to bully his way around these forums, annoying posters to the point they quit posting, it is regretful you have added considerably to that annoyance.

Claw Hammer

https://www.boards.ie/discussion/comment/122789703#Comment_122789703

You accuse people of not writing in English but then proceed to write something and tell someone to read it a different way. When you don't agree with someone you attack them. Argue it either way means arguing with the Revenue. You would hardly expect anyone to rely on what they read on this forum?

Madeoface

https://www.boards.ie/discussion/comment/122779465#Comment_122779465

If you are getting the paint it's obviously your room..…make sure the story for Revenue is more robust.