We have a stone-built building (formerly a stable) to the rear of our house on a Georgian terrace which is accessed either through the main house or via a secondary road to the rear and through the gardens. When our children were in college, we converted this to a study/living area with facilities such as a shower, toilet and kitchenette; the hayloft was converted to a mezzanine-type bedroom. The unit does not have independent utilities (light, heat, water etc) and these are extensions of the main house facilities. We are considering upgrading the unit with a view to possible future letting and we are wondering if this would qualify under the Revenue “rent-a- room” scheme.
Sums arising to an individual in respect of the letting, for residential purposes, of a room or rooms in his/her home, including, for example, sums arising from lettings to students for an academic year, and the provision of meals or other services supplied in connection with the letting, may be exempt from income tax where they are below the annual limit for the tax year in question (currently €12,000 per annum). Thus, these profits are disregarded for income tax, PRSI and USC purposes. This relief, known as rent-a-room relief, was introduced with the aim of increasing the availability of rented residential accommodation. The governing legislation is contained in section 216A Taxes Consolidation Act, 1997.
The room or rooms must be in a residential premises in the State that is occupied by an individual as his/her sole or main residence during that tax year. An individual may live in more than one residence but can only avail of rent-a-room relief in respect of his/her sole or main residence.
In general, an individual’s sole or main residence is that individual’s home for the greater part of the time and where friends and correspondents would expect to find him/her. It is not possible to let an entire residence because the room or rooms that are let must form part of the residence and the residence must be occupied by the individual receiving the rent as his/her sole or main residence.
The room or rooms can comprise a self-contained unit within the residence, such as a basement flat or a converted garage attached to the residence.
However, a self-contained unit that is adjacent to the residence but not actually attached to it cannot qualify for the relief.
It is unclear from the wording of your question whether your stone-built building (that was formerly a stable) is actually attached to your main residence or is a separate building altogether and consequently I trust that you can decipher for yourself if it would qualify from the information I have provided.
The above information is to the best of my knowledge as at today’s date however, I would also recommend that you check with your financial advisor and/or local tax office before proceeding.
Karol Jackson O’Shea is a residential agency surveyor and a member of the SCSI