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Rent-a-Room Scheme

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  • 22-04-2009 4:34pm
    #1
    5*times
    Closed Accounts Posts: 5 ✭


    Hi,

    I rent a room in an apartment where the landlord also lives and I've asked him for his details so I can complete the Rent Relief form. As far as I know, he doesn't have to register with the PRTB as he owns the apartment and he lives there? Rent including bills is below the threshold of €10k per annum but he said he hasn't disclosed this income to the Revenue. He's very sound and a great landlord but I just want to know if I'll get him into trouble if I start claiming rent relief? I've been there for 2 years now.


    Thanks

    5


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    #2
    MicraBoy
    Registered Users Posts: 916 ✭✭✭MicraBoy


    He doesn't have to register with PRTB for renting a room as you said.

    He'll only get in trouble if you put a figure on the form that indicates the rent is higher than €10k. Apart from that there will be no issues with him not declaring to revenue. And actually you will still get your tax relief if you omit his PPN from the form to revenue, as far as I know.


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    #3
    5*times
    Closed Accounts Posts: 5 ✭5*times


    MicraBoy wrote: »
    He doesn't have to register with PRTB for renting a room as you said.

    He'll only get in trouble if you put a figure on the form that indicates the rent is higher than €10k. Apart from that there will be no issues with him not declaring to revenue. And actually you will still get your tax relief if you omit his PPN from the form to revenue, as far as I know.

    Thanks. I know I can send it off without his PPS but don't want to get him into trouble as we get on great and I like living there. Think he was lazy and didn't bother declaring it to the revenue as it was below the 10k threshold. I just want to be certain that the Revenue won't fine him or audit him and basically get him into any sort of trouble with the revenue as he hasn't declared his rental income for 2 years.

    Thanks


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    #4
    earlyevening
    Registered Users Posts: 1,331 ✭✭✭earlyevening


    You are in the clear but the landlord still ought to declare the income.

    Although he will not be due income tax if the rent is under 10000, PRSI and health levy does have to be paid.

    Very few are aware of this. My accountant unfortunately made me aware of this when I was renting out a room a few years ago.


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    #5
    5*times
    Closed Accounts Posts: 5 ✭5*times


    earlyevening wrote: »
    Although he will not be due income tax if the rent is under 10000, PRSI and health levy does have to be paid.

    Very few are aware of this. My accountant unfortunately made me aware of this when I was renting out a room a few years ago.

    Really? I pay him €600 a month for rent and bills so how much does he owe the Revenue then? He might get in sh1t over it so I better let him know first!


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    #6
    MicraBoy
    Registered Users Posts: 916 ✭✭✭MicraBoy


    earlyevening wrote: »
    You are in the clear but the landlord still ought to declare the income.

    Although he will not be due income tax if the rent is under 10000, PRSI and health levy does have to be paid.

    Very few are aware of this. My accountant unfortunately made me aware of this when I was renting out a room a few years ago.

    That is incorrect. See the link: Rent a room rules

    and revenue leaflet
    5*times wrote:
    Really? I pay him €600 a month for rent and bills so how much does he owe the Revenue then? He might get in sh1t over it so I better let him know first!

    Nothing! That is only €7200 and this income is not liable to either PRSI or the 2% Health Levy but it must be included on an individuals annual income tax return.


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    #7
    earlyevening
    Registered Users Posts: 1,331 ✭✭✭earlyevening


    I am going to have an unpleasant (for him) conversation with my accountant tomorrow. Thanks for pointing that out to me.


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    #8
    MicraBoy
    Registered Users Posts: 916 ✭✭✭MicraBoy


    MicraBoy wrote:
    Nothing! That is only €7200 and this income is not liable to either PRSI or the 2% Health Levy but it must be included on an individuals annual income tax return.

    Sorry to quote myself but, myself and the other half had a look at the legislation last night, and it is completely vague about what the requirements for a PAYE worker are in regard to filing a tax return for rent a room scheme. It basically says that Revenue may require a PAYE worker to submit a return for rent a room. My interpretation of this is that if your rental income is less than €10000, and you do not ordinarily fill an annual return then you should only do so for rent a room, if Revenue ask you to.


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    #9
    5*times
    Closed Accounts Posts: 5 ✭5*times


    MicraBoy wrote: »
    Sorry to quote myself but, myself and the other half had a look at the legislation last night, and it is completely vague about what the requirements for a PAYE worker are in regard to filing a tax return for rent a room scheme. It basically says that Revenue may require a PAYE worker to submit a return for rent a room. My interpretation of this is that if your rental income is less than €10000, and you do not ordinarily fill an annual return then you should only do so for rent a room, if Revenue ask you to.

    Really? That's a bit vague alright. Was chatting with him last night about it and he's a bit nervous about the whole thing as he doesn't want any bother from the Revenue. Don't think he has anything to hide but just doesn't want the hassle.

    Can anyone else confirm what the law is with regards to a PAYE worker filing tax returns for a rent a room scheme? Is it obligatory even if the rental income is below the threshold of €10k?


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    #10
    MicraBoy
    Registered Users Posts: 916 ✭✭✭MicraBoy


    Well all I can say is that I have been renting a room for 5 years at this stage. Rent was below the threshold, all my lodgers have claimed their tax credits and I have never heard anything from Revenue on it. I think your mate is being paranoid if he thinks he will get hassle from Revenue on this issue.


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    #11
    5*times
    Closed Accounts Posts: 5 ✭5*times


    MicraBoy wrote: »
    Well all I can say is that I have been renting a room for 5 years at this stage. Rent was below the threshold, all my lodgers have claimed their tax credits and I have never heard anything from Revenue on it. I think your mate is being paranoid if he thinks he will get hassle from Revenue on this issue.

    Oh right! So you haven't filed a tax return in the 5 years you've rented rooms in your house/apartment? And your tenants claimed their tax credits no problems? That's great so if that's the case. He'll be a relieved and less paranoid man! :P

    Thanks


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    #12
    John Mason
    Hosted Moderators Posts: 10,661 ✭✭✭✭John Mason


    i have been renting out a room for years in my house, my tenants claimed their tax relief and i never heard from the revenue.

    i spoke with my tax lecturer last night about this prsi thing that was mentioned her and she never heard of it and just said it was scare mongering


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    #13
    otwb
    Registered Users Posts: 245 ✭✭otwb


    You can file a return on revenue.ie under 'exempt income' - no tax payable so better safe than sorry.


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    #14
    Victor
    Registered Users Posts: 78,388 ✭✭✭✭Victor


    5*times wrote: »
    Can anyone else confirm what the law is with regards to a PAYE worker filing tax returns for a rent a room scheme? Is it obligatory even if the rental income is below the threshold of €10k?
    Yes, you need to make the return. If you don't they might get curious as to how you are living beyond your apparent means.

    Now, whether they will get all excited about it or not is another matter.


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    #15
    Eurorunner
    Closed Accounts Posts: 2,393 ✭✭✭Eurorunner


    Provided your under the threshold, its just a formality and takes ten minutes to fill out the form and return.

    I didn't bother with it for the first two years but have done so since then. If your under the 10k threshold, then there are no additional tax charges.


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    #16
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    You are obliged to make a return- irrespective of whether you are below the threshold or not. Normally your first return is an eyeopener- as you discover a load of credits you have not been claiming, and actually end up with a small unexpected rebate in the post from the Revenue Commissioners.

    Its not difficult- but it is a bit boring doing a tax return. Make sure you have your P60 to hand.

    S.


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    #17
    julius128
    Registered Users Posts: 29 ✭julius128


    smccarrick wrote: »
    You are obliged to make a return- irrespective of whether you are below the threshold or not. Normally your first return is an eyeopener- as you discover a load of credits you have not been claiming, and actually end up with a small unexpected rebate in the post from the Revenue Commissioners.
    S.

    Is that mean if you rent out a room and fill the form and send it to Revenue, you as a Landlore, will get tax credit or rebate from previous years??:eek:


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    #18
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    julius128 wrote: »
    Is that mean if you rent out a room and fill the form and send it to Revenue, you as a Landlore, will get tax credit or rebate from previous years??:eek:

    No- what I meant was the average person is not claiming credits and allowances that they are entitled to- for example (and this is by no means a definitive list)-
    • Home Loan Mortgage Interest Relief
    • Medical & Dental Expenses
    • BES / Film Relief
    • Purchase of New Shares in a Company by an Employee
    • Service Charges
    • Incapacitated Persons Allowance
    • Owner Occupier Relief
    • Home Carer’s Tax Credit
    • Permanent Health Insurance
    • Retirement Annuity Relief / PRSA
    • Dependant Relative Tax Credit
    • Job Assist Allowance
    • Seafarers Allowance
    • Donations (allowable donations over €250 only)
    • Tuition Fees / Approved Courses
    • Interest on Loans used in acquiring Interest in unquoted trading companies –
    • Trade Union Subscriptions

    Most people do not claim that which they are entitled to. There are no magic rent-a-room reliefs to be claimed- its simply- keep under 10k, and its tax free (but you must declare it).

    S.


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