IF you rent out a room in your home, you have certain rights and responsibilities. These are different depending on if you are renting a self-contained unit, or a room in your home.
If you are renting a room in your home, you may be able to claim the rent-a-room tax relief. This allows you to earn up to €14,000 per year in rent tax-free, if you rent out a room in your home to private tenants.
There are additional rules for the rent-a-room relief if you are a local authority tenant renting a room to a student, or if you are renting a room to someone getting the Housing Assistance Payment.
If you are getting a means-tested weekly social assistance payment, you can get up to €14,000 per year for renting out a room in your own home without it affecting your social welfare payment.
What are the rules if I am renting out a self-contained unit attached to my home?
If you rent out a self-contained unit in your home, such as a converted garage attached to your home or a basement flat, the rights and responsibilities of a landlord under residential tenancies legislation apply.
For example, you must register the tenancy with the Residential Tenancies Board (RTB) every year and make sure that the accommodation meets minimum physical standards.
However, if the self-contained flat or apartment was originally part of the main house, you can choose to opt out of one requirement of residential tenancies legislation. This is the requirement that gives tenants the right to stay in rented accommodation for a set amount of time. This exemption is available under Section 25 of the Residential Tenancies Act 2004. You must give the tenant notice in writing, before the start of the tenancy, if you want to opt out of the rules about security of tenure.
What are the rules if I am renting out a room in my home?
If the part of your home that you rent out is not self-contained, you are not covered by landlord and tenant legislation, so the rights and responsibilities under that legislation do not apply to you. For example, you do not have to register as a landlord with the RTB and the accommodation does not need to meet any minimum physical standards.
A person renting a room in your home is living there under a licence agreement, not a tenancy agreement. This means that they are only entitled to reasonable notice if you decide to terminate the agreement. However, they can refer disputes under the Small Claims Procedure.
Should I have an agreement when renting a room?
Before you rent out a room in your home, you and the person renting the room should agree some ground rules and put them in writing. If you both sign and keep a copy of this agreement, you can refer to it if there is a disagreement. These ground rules might include:
• How long is the licence arrangement going to last?
• How much notice you must give if either of you chooses to end the arrangement?
• How much rent will be paid and how often?
• How will rent be paid? Will it be in cash, or by cheque or standing order?
• When will the rent be reviewed and how much notice will you give of a rent review?
• How are utility bills divided between you?
• Can the person who is renting have visitors to stay overnight?
• Are there any restrictions about noise levels?
Do I qualify for the rent-a-room relief scheme?
Rent-a-room relief lets you earn up to €14,000 per year tax-free if you rent out a room in your home to private tenants. You can also get the relief if you rent out a self-contained unit, such as a basement flat or a converted garage. You do not have to own the property to claim the relief.
To qualify for rent-a room tax relief, you must occupy your home as your sole residence. This means that it is your home for the greater part of the year and it is where people would normally expect to contact you. Your total rental income cannot be more than €14,000 per tax. This includes any money that your tenant pays for food, utilities, laundry or similar goods and services. And the people you rent to must use the room on a long-term basis. This means stays of more than 28 days in a row.
You do not have to own the property to qualify for rent-a-room relief. You could be a tenant and be sub-letting to someone else. In this case, you should check with your landlord that sub-letting is allowed.
Can I rent a room in my local authority home to a student?
Since December 1st 2023, social housing tenants can rent a room in their home to a third-level student. This is known as the Room for a Student Local Authority Tenancies Scheme. If you qualify, you will be able to get rent-a-room tax relief, which means up to €14,000 of your rent payments per year are tax-free. However, this rental income will be considered when calculating the differential rent you pay the local authority.
So, if your application is approved, the local authority will review your rent to take this additional income into account. There are some conditions the local authority tenant and the student must meet to qualify for this scheme. The tenancy agreement you have with your local authority might need to be updated, so you can participate in the scheme. You should contact your local CIC for additional information.
How does rental income affect my social welfare payment?
If you are getting a means-tested weekly social assistance payment, Supplementary Welfare Allowance or Working Family Payment, you can get up to €269.23 a week (€14,000 per year) for renting out a room in your own home without it affecting your social welfare payment.
This also applies if you are getting the Living Alone Increase, Household Benefits Package or Fuel Allowance. However, with Fuel Allowance, the person renting the room from you must be getting a qualifying social welfare payment or must qualify for Fuel Allowance in their own right. You should check with your local Citizens Information Service to see if renting a room in your home will affect any other payments.
In certain situations, rental income of less than €14,000 a year for renting a room will be taken into account and can affect your social welfare payment. This applies if you rent a room in your home as a short-term let (stays that do not exceed 28 days in a row), to an employee, or to an immediate family member.
What is the Accommodation Recognition Payment?
The Accommodation Recognition Payment is a tax-free payment of €800 per month for hosting refugees from Ukraine. This payment is not taken into account in the means test for any grants or payments from the Department of Social Protection or other public bodies.
What are the rules if I rent a room to someone getting the Housing Assistance Payment?
The person renting a room in your home may qualify for the Housing Assistance Payment (HAP). If they are applying for the Housing Assistance Payment (HAP), you will need to provide certain information to the local authority. The local authority will pay you HAP directly. This information includes the monthly rent, bank account payment details, compliance with standards for rental accommodation, tax compliance, proof that you own the property.
The local authority will inspect the property within eight months of the first HAP payment, unless the accommodation has already been inspected in the last 12 months. An inspector will check that the accommodation meets the minimum physical standards for rental accommodation.
You must show that your tax affairs are in order by producing evidence of tax clearance from Revenue. Tax compliance is checked in ‘real-time’ on Revenue’s electronic tax clearance system.
