Rent-a-room scheme/Rental income question

siobhan.m

Hi, I have two questions that I thought someone might be able to help me with.
I and my boyfriend own a 3-bed apartment in Dublin and rent out 2 of the rooms to help with the mortgage. I'm a full-time student in another county and he works full-time. This year the rental income is under €10 000 so we qualify for the rent-a-room scheme, however next year we will earn €12 000 from the two rooms. My questions are the following:

1. If your situation is similar to this what sort of tax are you paying on the rental income? Maybe its better to not earn more than €10 000?

2. I know the rental income and tax paid can be shared between both of us i.e. €5 000 each - is this a better way to do it or would it make more sense for one person to pay the tax, e.g. me as I only work one day a week. Or is this even legal, maybe we have to split the income? We are both on the mortgage, he is not a FTB.

Thanks in advance.

colm_c

siobhan.m wrote: »

Hi, I have two questions that I thought someone might be able to help me with.
I and my boyfriend own a 3-bed apartment in Dublin and rent out 2 of the rooms to help with the mortgage. I'm a full-time student in another county and he works full-time. This year the rental income is under €10 000 so we qualify for the rent-a-room scheme, however next year we will earn €12 000 from the two rooms. My questions are the following:

1. If your situation is similar to this what sort of tax are you paying on the rental income? Maybe its better to not earn more than €10 000?

2. I know the rental income and tax paid can be shared between both of us i.e. €5 000 each - is this a better way to do it or would it make more sense for one person to pay the tax, e.g. me as I only work one day a week. Or is this even legal, maybe we have to split the income? We are both on the mortgage, he is not a FTB.

Thanks in advance.

The first 10k from the rent a room scheme is tax free, so you'll need to pay tax on the additional 2k.

Not sure how it works for two people on the mortgage on separate tax brackets, it might be that you're taxed on 1k each, or whomever has the lower tax bracket pays the tax on it.

I'm fairly sure it's 1k each that you'll be taxed on.

mags16

If there are 2 of you who won the house, the €10,000 tax limit can be divided between you. Check out this link - http://www.myhome.ie/lettings/advice-centre/1171-1171-2502/rent-a-room-scheme.asp

siobhan.m

colm_c wrote: »

The first 10k from the rent a room scheme is tax free, so you'll need to pay tax on the additional 2k.

Not sure how it works for two people on the mortgage on separate tax brackets, it might be that you're taxed on 1k each, or whomever has the lower tax bracket pays the tax on it.

I'm fairly sure it's 1k each that you'll be taxed on.

Thanks, I was thinking that as we will earn more than €10 000 we would not be entitled to any tax relief - the citzens information website says the following, which made me think this:

'You will not get rent a room relief if your gross income from rent is over €10,000. In this case, your rental income minus allowable expenses will be treated by Revenue as part of your total income for tax purposes and should be included in your tax return'

siobhan.m

mags16 wrote: »

If there are 2 of you who won the house, the €10,000 tax limit can be divided between you. Check out this link - http://www.myhome.ie/lettings/advice-centre/1171-1171-2502/rent-a-room-scheme.asp

Thanks for your response, I had checked all this out but was wondering how much we'd pay when we earn over €10 000. Best thing to do is ring them when I'm back home I guess. Thanks again.

mikemac

colm_c wrote: »

The first 10k from the rent a room scheme is tax free, so you'll need to pay tax on the additional 2k.

Not just the extra 2k
If you go over 10k you are liable for tax on all of it

So it might be worth your while to drop the rent price and you'll end up with the same money
Edit: This is how I've always understood the scheme, I stand to be corrected

siobhan.m wrote: »

Thanks for your response, I had checked all this out but was wondering how much we'd pay when we earn over €10 000. Best thing to do is ring them when I'm back home I guess. Thanks again.

Good info here, I use this site all the time
http://www.citizensinformation.ie/categories/housing/owning-a-home/home-owners/rent_a_room_scheme

siobhan.m

mikemac wrote: »

Not just the extra 2k
If you go over 10k you are liable for tax on all of it

So it might be worth your while to drop the rent price and you'll end up with the same money
Edit: This is how I've always understood the scheme, I stand to be corrected



Good info here, I use this site all the time
http://www.citizensinformation.ie/categories/housing/owning-a-home/home-owners/rent_a_room_scheme

Thanks, I have checked on this site and thought we would be paying tax on all of it - I was hoping someone in the same situation would give me an idea of the tax I can expect to pay. Might be easier to drop rent in the long run.

dearg lady

Yeah, as far as I know you will be liable on the full amount once you go over €10,000, but if you're only working one day a week you may still be under the threshold for paying tax with your total income...pre budget, who knows post budget! there's a tax forum on here too which might be more useful for these kind of questions

siobhan.m

dearg lady wrote: »

Yeah, as far as I know you will be liable on the full amount once you go over €10,000, but if you're only working one day a week you may still be under the threshold for paying tax with your total income...pre budget, who knows post budget! there's a tax forum on here too which might be more useful for these kind of questions

That's what I thought, I might try the tax forum - I guess what I really want to know is can I claim all the earnings myself or do we both HAVE to share them. I have a feeling it will be the latter case but hoping it might not be. It'll be next year when we earn more than €10 000 so the budget will likely affect it. Thanks for your help.

tHE vAGGABOND

Also remember, the 10k figure also includes money received for bills etc - not just actual rental income..

As someone said, if you go a single cent over it, your liable for tax on every penny of it.

Jo King

siobhan.m wrote: »

That's what I thought, I might try the tax forum - I guess what I really want to know is can I claim all the earnings myself or do we both HAVE to share them. I have a feeling it will be the latter case but hoping it might not be. It'll be next year when we earn more than €10 000 so the budget will likely affect it. Thanks for your help.

If you exceed the 10K you will also become liable for capital gains tax when the house is sold.

gamer

I THINK you cannot be charged capital gains tax if you live in the house,and you rent out 1 or 2 rooms.under the rent a room scheme theres no need to be registered, as you,d have 1 tenant, and the rent is under 10k.