Letting out whole house or individual rooms

Minime2.5 · 17-05-2020 10:55am #1

I was considering buying a one bedroom apartment apartment in Waterford but I'm considering a 3 bedroom house instead . The thing is I'm not sure if I'm fully committed to staying in Waterford in the long term. If I was to buy the house and move to Dublin or Cork for work would I be better off

A.renting out the whole house as in a letting situation and have a lease or

B. Rent out 2 of the rooms on an individual basis and keep the 3rd room free as my own so would have access to the house as I please ?

In which scenario would I earn more more money/Pay more Tax?

If I decide to rent the whole house and invest in a letting agency , how much do they charge?

This is all very hypothetical for the time being, just trying to get some info

Gumbo · 17-05-2020 12:16pm

Tax depends on your PAYE income so unless you post all that info we can’t expand.
Letting out rooms is the easiest solution as you keep control and plus you can earn €14k tax free (but you still have to declare and submit a return). But it must be your PPR.

dennyk · 17-05-2020 2:34pm

Note that in order to claim the tax relief under the Rent-a-Room scheme, you must live in the house full time; simply reserving a room in the house for your occasional use doesn't make it your primary residence. Also, for the Rent-a-Room scheme, the maximum gross income you can bring in from renting those rooms, including anything the tenants pay to you to cover utilities, cannot exceed €14,000 per year; if you take in even one penny more, you are taxed on the entire amount (after deducting allowable expenses), not just the overage.

That said, letting out the individual rooms might still be a more flexible arrangement even without the tax relief, as it might not be considered a tenancy.

Claw Hammer · 17-05-2020 2:42pm

The RTB might decide at some point that it is a tenancy and all the occupants are entitled to the benefits of part four. There might be difficulties with your bank if you're considered to be using the property as an investment property rather than as a principal residence. The Revenue might decide you are not living in the property and refuse the tax relief although this is inconsistent with other policies of the revenue allowing you collect as to which residence is your ppr.

17-05-2020 5:12pm

dennyk wrote: »

Note that in order to claim the tax relief under the Rent-a-Room scheme, you must live in the house full time; simply reserving a room in the house for your occasional use doesn't make it your primary residence. Also, for the Rent-a-Room scheme, the maximum gross income you can bring in from renting those rooms, including anything the tenants pay to you to cover utilities, cannot exceed €14,000 per year; if you take in even one penny more, you are taxed on the entire amount (after deducting allowable expenses), not just the overage.

That said, letting out the individual rooms might still be a more flexible arrangement even without the tax relief, as it might not be considered a tenancy.

Don’t have to live their full time just have to spend enough time there to claim it as your main residence. How long that is could be open to interpretation.

Claw Hammer · 17-05-2020 5:13pm

Remy Ambitious Stocking wrote: »

Don’t have to live their full time just have to spend enough time there to claim it as your main residence. How long that is could be open to interpretation.

The question then is, do you want to be the test case?

17-05-2020 8:18pm

Claw Hammer wrote: »

The question then is, do you want to be the test case?

It’s quite a difficult one to prove either way. If you are spending fri night to Monday morning in the place and the rest somewhere else and all holidays etc at the house would be hard to say it wasn’t your main residence. Where people officially live often isn’t where they live most of the week either.

As far as any bank, government body or any company i have any dealing with I’ve never left home everything always stays address there even though I’ve spend spells of a few years living a few hours away at times.

Graham · 17-05-2020 8:28pm

Mod

Before we swerve too far off topic, feel free to continue the 'main residence' discussion in the taxation forum.

Vita nova · 18-05-2020 8:54am

If the mortgage will represent a considerable portion of your wages then my advice would be to rent individual rooms so that if one tenant doesn't pay the rent for whatever reason then at least you'll still get rent from the other tenant(s) while you deal with the delinquent tenant. Renting individual rooms would be more work but it's safer.

Claw Hammer · 18-05-2020 9:37am

The o/p won't be living bin the same tow as the rental and will thus have considerable difficulty keeping up with individual room lets. It is a very hands on type of letting.

18-05-2020 10:18am

Claw Hammer wrote: »

The o/p won't be living bin the same tow as the rental and will thus have considerable difficulty keeping up with individual room lets. It is a very hands on type of letting.

In my opinion letting by the room is the only way to approach renting a house, it’s a far less risky way of doing things than a full house in many ways (less chance of not getting rent, less chance of over-holding, easier to get the house back etc) and also (leaving rpz rules aside) you can get more money for the house.

I’ve only ever rented myself in rooms let separately house shares and in the multiple I’ve been in the only one I saw the LL anyway regularly was the one I paid cash. In the i was in for 3 years I say the LL once and contacted him maybe 2/3 times (and he just sent a tradesman). So I don’t think it’s anymore hands on.

curious minds · 18-05-2020 5:48pm

'The RTB might decide at some point that it is a tenancy and all the occupants are entitled to the benefits of part four'

I tried to look up instances of this on the RTB site decisions/adjudications, searched for a long time
found none.
What are the basis on which a judge can decide this?

Graham · 18-05-2020 6:57pm

The last similar case I read was where a non-resident landlord claimed to be resident because they'd kept a room, therefore the other occupant was a licensee.

Other occupant was found to be a tenant with the associated Part 4 rights.

Claw Hammer · 19-05-2020 12:03pm

curious minds wrote: »

'The RTB might decide at some point that it is a tenancy and all the occupants are entitled to the benefits of part four'

I tried to look up instances of this on the RTB site decisions/adjudications, searched for a long time
found none.
What are the basis on which a judge can decide this?

You won't find anything in the adjudications. The Tully case was one where the High Court accepted that the question of whether a landlord was living in the property or not was a question of fact for the RTB to decide.

LJ12345 · 19-05-2020 1:28pm

Claw Hammer wrote: »

You won't find anything in the adjudications. The Tully case was one where the High Court accepted that the question of whether a landlord was living in the property or not was a question of fact for the RTB to decide.

Assuming a tenant gets part 4 by renting a room, what is the worst case scenario? You would need to give x days notice based on length of residency to either take the room back for yourself or to sell the house and you would be obliged to pay tax? Presumably the owner can still stay in their room as they please as they’ve kept it for themself.

Claw Hammer · 19-05-2020 1:46pm

LJ12345 wrote: »

Assuming a tenant gets part 4 by renting a room, what is the worst case scenario? You would need to give x days notice based on length of residency to either take the room back for yourself or to sell the house and you would be obliged to pay tax? Presumably the owner can still stay in their room as they please as they’ve kept it for themself.

If you have already claimed the tax relief you could have to pay back the tax plus penalties and interest. If the tenant gets part 4 you are into notices of termination possibly RTB hearings going on for a lengthy period to get the tenant out.

LJ12345 · 19-05-2020 2:08pm

Claw Hammer wrote: »

If you have already claimed the tax relief you could have to pay back the tax plus penalties and interest. If the tenant gets part 4 you are into notices of termination possibly RTB hearings going on for a lengthy period to get the tenant out.

Agree the ‘tenant’ could generate awkwardness if they dug their heels in but they’d need grounds to do so and atleast if they owner was in situ they could protect their home

TheBoyConor · 19-05-2020 2:14pm

<SNIP>

TheBoyConor · 19-05-2020 2:36pm

Claw Hammer wrote: »

If you have already claimed the tax relief you could have to pay back the tax plus penalties and interest. If the tenant gets part 4 you are into notices of termination possibly RTB hearings going on for a lengthy period to get the tenant out.

I'd be concerned that forcing an unwanted tenancy situation on an owner occupier, whereby they could not legally evict an unwanted and possibly hostile tenant lodger for a protracted period of time, might contravene Article 5 of Bunreacht na hEireann. Imagine having to share your own home, the place where you should feel safe, with a possibly hostile and/or abusive lodger who cannot be removed by legal means.

19-05-2020 4:32pm

Claw Hammer wrote: »

If you have already claimed the tax relief you could have to pay back the tax plus penalties and interest. If the tenant gets part 4 you are into notices of termination possibly RTB hearings going on for a lengthy period to get the tenant out.

Leaving the rent a room relief aside I cant honestly see how a person renting a room could be given RTA rights once an owner has maintained a room and some sort of regular use of it i.e. staying there most/every weekend.

So many of the rights under the RTA are incompatible with living with the owner that it just rubbishes it imo (for example how can a "tenant" claim peaceful enjoyment rules when he has no right to stop the LL entering the property as the LL has a room he can't be stopped from accessing). Even if it is enacted the owner still lives in the house and just gives notice for needing the room back for him/herself job done and no way to say they don't need it since they already live in the house.

Graham · 19-05-2020 5:19pm

I don't see how it could be done any other way to be honest.

You'd suddenly have landlords across the country 'maintaining a room' if it were an easy way to opt-out of the obligations of the RTA.

19-05-2020 5:32pm

Graham wrote: »

I don't see how it could be done any other way to be honest.

You'd suddenly have landlords across the country 'maintaining a room' if it were an easy way to opt-out of the obligations of the RTA.

If they are actually regularly sleeping in the house though how can it fall under the RTA. Even a few days a month imo clearly shows regular use and I could list of a load of rules under the RTA that cannot be adhered to if the owner has continued access to the house. How can the RTA apply when respecting the rules would not be compatible with the situation.

Example:

Exclusive use - no
Peaceful enjoyment - no
LL giving notice before visiting - no

I'm not proposing this as a way around the RTA it is situations where people are genuinely living in two places which is quite common nowadays.

Obvious Desperate Breakfasts · 19-05-2020 5:50pm

Remy Ambitious Stocking wrote: »

If they are actually regularly sleeping in the house though how can it fall under the RTA. Even a few days a month imo clearly shows regular use and I could list of a load of rules under the RTA that cannot be adhered to if the owner has continued access to the house. How can the RTA apply when respecting the rules would not be compatible with the situation.

Example:

Exclusive use - no
Peaceful enjoyment - no
LL giving notice before visiting - no

I'm not proposing this as a way around the RTA it is situations where people are genuinely living in two places which is quite common nowadays.

I’m pretty sure that wouldn’t cut it. It needs to be the landlord’s principal residence to qualify for rent a room and that would need to be a majority of the year, I should think. I can’t see it being different for establishing tenant rights in a non rent a room situation. And one of the simplest tools at Revenue’s disposal would be asking the residents of the house how often the landlord stayed. I’ve was never in a houseshare where I wasn’t aware of how often the other residents were in the house. And if a tenant’s rights are at risk, they certainly won’t embellish how often the landlord was there. If it was so easy to extinguish tenants’ rights, every landlord would do it.

19-05-2020 6:31pm

Obvious Desperate Breakfasts wrote: »

I’m pretty sure that wouldn’t cut it. It needs to be the landlord’s principal residence to qualify for rent a room and that would need to be a majority of the year, I should think. I can’t see it being different for establishing tenant rights in a non rent a room situation. And one of the simplest tools at Revenue’s disposal would be asking the residents of the house how often the landlord stayed. I’ve was never in a houseshare where I wasn’t aware of how often the other residents were in the house. And if a tenant’s rights are at risk, they certainly won’t embellish how often the landlord was there. If it was so easy to extinguish tenants’ rights, every landlord would do it.

Not for me. For claiming rent a room I’d want to be about 50/50. If I say had an apartment in Dublin and a family home down the county spent Monday night to fri morning in the apartment and the rest at home I wouldn’t hesitate in claiming rent a room. I would be very confident in having no issue with revenue in the above scenario.

For RTA I think the bar is far lower. If the owner spending a few days a month in the house then the people renting the room live with the owner simple as that he just spreads his time across different houses.

I don’t think every LL would do it either, it involves losing out on rent and also having to stay in the house regularly. How many are going to go to that trouble and hassle unless they actually want to stay in the house.

As for knowing how often the other residents are there, that’s just hearsay and your word against someone else’s. Also very few people even have a clue about the RTA or anything. I don’t think I’ve ever shared with someone who didn’t think that 30 days notice was all you had to get if the LL wanted you out or there was anything to stop him evicting you. I’m not saying this to promote rules breaking etc I’m simply saying that the vast majority of people wouldn’t even know they could challenge something like how often the owner stays there never mind keep track of how often he is there.

The only challenges that have ever come to light are ones where the LL never really stayed there and to me that is telling as there must be thousands living in rent a room where the owner staying there some of the time.

Graham · 19-05-2020 7:04pm

Remy Ambitious Stocking wrote: »

I'm not proposing this as a way around the RTA it is situations where people are genuinely living in two places which is quite common nowadays.

I don't think it is that common.

I'd also expect for the rare occurrences where it does happen, the 'tenant' would pay much less than the going rate for an entire property. For that reason alone most landlords wouldn't want to maintain a room, legitimately or otherwise.

guyfawkes5 · 19-05-2020 7:41pm

Remy Ambitious Stocking wrote: »

Not for me. For claiming rent a room I’d want to be about 50/50. If I say had an apartment in Dublin and a family home down the county spent Monday night to fri morning in the apartment and the rest at home I wouldn’t hesitate in claiming rent a room. I would be very confident in having no issue with revenue in the above scenario.

For RTA I think the bar is far lower. If the owner spending a few days a month in the house then the people renting the room live with the owner simple as that he just spreads his time across different houses.

I don’t think every LL would do it either, it involves losing out on rent and also having to stay in the house regularly. How many are going to go to that trouble and hassle unless they actually want to stay in the house.

As for knowing how often the other residents are there, that’s just hearsay and your word against someone else’s. Also very few people even have a clue about the RTA or anything. I don’t think I’ve ever shared with someone who didn’t think that 30 days notice was all you had to get if the LL wanted you out or there was anything to stop him evicting you. I’m not saying this to promote rules breaking etc I’m simply saying that the vast majority of people wouldn’t even know they could challenge something like how often the owner stays there never mind keep track of how often he is there.

The only challenges that have ever come to light are ones where the LL never really stayed there and to me that is telling as there must be thousands living in rent a room where the owner staying there some of the time.

The spirit of the law that allows occupying landlords to evict tenants far more easily than if they weren't resident is obviously based on the assumption that a landlord should not have to effectively surrender their home, which is generally recognised to be your primary residence.

Trying to move the definition to mean spending the odd night goes completely against that commonly held grain, and I would not count on the civil service enforcement of it being befuddled by technicalities or grey areas if they chase you on it. Any conversations I've had with civil servants in charge of enforcing these things are usually well aware of what people will try and reading between the lines in presented evidence.

Obvious Desperate Breakfasts · 19-05-2020 7:48pm

Remy Ambitious Stocking wrote: »

Not for me. For claiming rent a room I’d want to be about 50/50.

I don’t think you get to decide the split. I mean, you can chance your arm but if caught, it would Revenue that decide, not you. A main residence is defined as where you live “most of the year”. That would need to be more than 50% of the year and probably significantly more than 50%.

As for tenants relating how often they see the landlord, what they tell Revenue would likely be taken seriously. I know I’d be reluctant to lie if I was questioned. I would just want to tell the truth and keep myself out of trouble.

curious minds · 19-05-2020 8:49pm

The worst case scenario could be : there are two rooms in the house, landlord rents one while keeping the other room for himself,
Landlord goes travelling for 6 months, licencee convinces RTB and claims exclusive occupancy ,RTB decides he/she is a tenant and gets part 4, Landlord is kicked out of his own house ....I know sounds ridiculous but based on the rules it might be possible ...so how does the RTB take a decision like this ....any examples out there?

curious minds · 19-05-2020 9:16pm

LJ12345 wrote: »

Assuming a tenant gets part 4 by renting a room, what is the worst case scenario? You would need to give x days notice based on length of residency to either take the room back for yourself or to sell the house and you would be obliged to pay tax? Presumably the owner can still stay in their room as they please as they’ve kept it for themself.

The worst case scenario could be : there are two rooms in the house, landlord rents one while keeping the other room for himself,
Landlord goes travelling for 6 months, licencee convinces RTB and claims exclusive occupancy ,RTB decides he/she is a tenant and gets part 4, Landlord is kicked out of his own house ....I know sounds ridiculous but based on the rules it might be possible ...so how does the RTB take a decision like this ....any examples out there?

LJ12345 · 19-05-2020 9:22pm

curious minds wrote: »

The worst case scenario could be : there are two rooms in the house, landlord rents one while keeping the other room for himself,
Landlord goes travelling for 6 months, licencee convinces RTB and claims exclusive occupancy ,RTB decides he/she is a tenant and gets part 4, Landlord is kicked out of his own house ....I know sounds ridiculous but based on the rules it might be possible ...so how does the RTB take a decision like this ....any examples out there?

There’s rent a room leases and entire property leases. The rule in the uk is if you do not have the lease/ right to use all 4 corners of the property then you’re not leasing the entire house and the landlord has access to the areas kept for themselves. I haven’t seen any mention of anything surrounding the rules on this in Ireland, anyone any insight?

Claw Hammer · 19-05-2020 9:24pm

Remy Ambitious Stocking wrote: »

Leaving the rent a room relief aside I cant honestly see how a person renting a room could be given RTA rights once an owner has maintained a room and some sort of regular use of it i.e. staying there most/every weekend.

.

I was at an RTB adjudication where that very thing happened.

Claw Hammer · 19-05-2020 9:25pm

LJ12345 wrote: »

There’s rent a room leases and entire property leases. The rule in the uk is if you do not have the right to all 4 corners of the property then you’re not leasing the entire house and the landlord has access to the areas kept for themselves. I haven’t seen any mention of anything surrounding the rules on this in Ireland, anyone any insight?

This is not the UK. We left in 1922.

19-05-2020 9:27pm

Claw Hammer wrote: »

I was at an RTB adjudication where that very thing happened.

How did they justify it when the rules of the RTA could not be met. The Owner is entitled to enter the house, stay in the house and do as he pleases in house going against a large amount of the RTA. How often was the owner staying in the house?

I would assume immediately after the adjunction the “tenant” was given notice as the owner required the room back for his own use.

Claw Hammer · 19-05-2020 9:30pm

Remy Ambitious Stocking wrote: »

How did they justify it when the rules of the RTA could not be met. The Owner is entitled to enter the house, stay in the house and do as he pleases in house going against a large amount of the RTA.

I would assume immediately after the adjunction the “tenant” was given notice as the owner required the room back for his own use.

The finding was that the tenant was a tenant of that room with shared services.
What happened after that was the owner had to stay living with the tenant.

LJ12345 · 19-05-2020 9:33pm

Claw Hammer wrote: »

This is not the UK. We left in 1922.

Very constructive thanks

Claw Hammer · 19-05-2020 9:36pm

LJ12345 wrote: »

Very constructive thanks

You are welcome.

curious minds · 19-05-2020 9:49pm

Claw Hammer wrote: »

I was at an RTB adjudication where that very thing happened.

Where is this adjudication? any name? so we can read the report and figure out the grounds on which RTB made the adjudication

dennyk · 19-05-2020 9:55pm

Keep in mind there are different rules and criteria for the Rent-a-Room tax relief scheme and for determining whether a rental is a license or a tenancy; a license agreement can still exist in certain circumstances even if the rental in question doesn't qualify for the Rent-a-Room scheme by Revenue's standards. The landlord keeping a room for his own regular use may be enough for the RTB to deem the arrangement a license agreement even if it is not the landlord's primary residence and therefore doesn't qualify for Rent-a-Room tax relief.

Claw Hammer · 20-05-2020 11:23am

curious minds wrote: »

Where is this adjudication? any name? so we can read the report and figure out the grounds on which RTB made the adjudication

Only Determination Orders are published in respect of adjudications, which are private in any case.

LJ12345 · 31-05-2020 7:01pm

Useful information for this thread. 3rd point on the types of licensee arrangements

Link: https://onestopshop.rtb.ie/beginning-a-tenancy/types-of-tenancies-and-agreements/licences/

Letting out whole house or individual rooms

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