Rent-a-room above the €14000 threshold

recipesforme

Hi,

I was wondering if anyone could give me advice about renting rooms out in their home?
If I was to rent out rooms for at (or even below) market rate it would bring me above the €14000 tax free threshold.
Once this number is exceeded, is the entirety of the rental income taxable?
Also, as I would still be living in the house, would the renters be licensees or tenants once the 14000 mark was passed?

Many thanks for any advice.

L1011

The entirety of the rental income is taxable above 14k; they would still be licencees - that status does not depend on the tax situation.

Once you pass the 14k then the entire amount is taxable so it's a far better idea to keep it at or below this figure. I wouldn't be surprised if the threashold is raised again in the budget though.

The people living there will be licensees regardless of exceeding the 14K or not.

godtabh

You pay tax on the whole lot.

Be happy with your €14k tax free

recipesforme

Thanks so much for the replies.

Pardon my ignorance. Once passed the €14000 is the whole lot declared as income? As in, it would be seen as your wages +rental income and you would be taxed as such?
Would that mean that anything that pushes you over the tax threshold would be taxed at 40%?

recipesforme

Thanks Godtabh but I don't mind paying the tax if that's what's required.

I'm just looking for a little advice

testicles

This post has been deleted.

hometruths

I would think good advice is don't charge anymore than 14000. (assuming market value is not about 25000!)

Mrs OBumble

The rental income is tax free up to 14k.

After that, the whole lot is taxable alongside any other income you have. So if you're single and less than 55(*), the first 8-ish k of your total lincome is still tax free, then up to 35k is taxed at the lower rate and after 35 is taxed at 51% (ie 40% + PRSI + USC).

(*) I'm pretty sure that 55+s get a special tax credit, meaning the first 16k is tax free for them.

Particularly if your other income is low, having the whole lot taxable is not necessarily a bad thing: seek professional advice re what expenses you can claim against it.

recipesforme

I think you're all assuming I know a lot more than I do!

I just really want to know if the rental income is above €14000 then the tax charged is at 40%?

recipesforme

That's great - thanks a million Mrs OBumble. That's a great help

godtabh

recipesforme wrote: »

I think you're all assuming I know a lot more than I do!

I just really want to know if the rental income is above €14000 then the tax charged is at 40%?

Depends on your marginal tax rate. Could be 52% with PRSI, USC etc paid

tanit

Mrs OBumble wrote: »

The rental income is tax free up to 14k.

After that, the whole lot is taxable alongside any other income you have. So if you're single and less than 55(*), the first 8-ish k of your total lincome is still tax free, then up to 35k is taxed at the lower rate and after 35 is taxed at 51% (ie 40% + PRSI + USC).

(*) I'm pretty sure that 55+s get a special tax credit, meaning the first 16k is tax free for them.

Particularly if your other income is low, having the whole lot taxable is not necessarily a bad thing: seek professional advice re what expenses you can claim against it.

Where did you get this from? The tax bands for PAYE are 33,600 and the PAYE and Personal credit are 3,300. The age tax credit does not kick in until you are 65 and once you are over 13,000 per year you have to pay USC as per bands. Plus of course Prsi.

What am I missing here? Where is that 8ish free income coming from theoretically covered by your tax credits for Paye is 16,500, 11000 if you are self employed but that's only for Income tax.

Edit The 8,250 refers to income only if all your income comes from renting and you apply the personal tax credit only as you are not entitled to Earned Income TC. But there is no tax credit at 55 the value of the one you get at 65 is 245 or equivalent income of 1,225

adam88

If you are renting a room can you write off expenses against this. I.e interest etc. Assuming it goes over the 14k

circular flexing

adam88 wrote: »

If you are renting a room can you write off expenses against this. I.e interest etc. Assuming it goes over the 14k

You cannot claim any expenses while renting out under the rent-a-room.

the_syco

recipesforme wrote: »

Pardon my ignorance. Once passed the €14000 is the whole lot declared as income?

You'll see some landlords giving their licensees a "months free of rent" at December to keep below that €14,000

ted1

circular flexing wrote: »

adam88 wrote: »

If you are renting a room can you write off expenses against this. I.e interest etc. Assuming it goes over the 14k

You cannot claim any expenses while renting out under the rent-a-room.

If you go over the 14k you can.

If you are a couple and assessed as individuals can you earn 14k each?

Lumen

ted1 wrote: »

If you are a couple and assessed as individuals can you earn 14k each?

No.

http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/rent_a_room_scheme.html

Alkers

circular flexing wrote:

You cannot claim any expenses while renting out under the rent-a-room.

You can, there are examples outlining your options on the revenue site

exaisle

Simona1986 wrote: »

You can, there are examples outlining your options on the revenue site

That isn't my understanding.....

From the Revenue website:

"In establishing whether the income arising in respect of residential
accommodation and ancillary services (see paragraph 5.2) exceeds the exempt limit, the gross amount of that income is taken into account. No deduction is allowed for any expenses that have been incurred in connection with obtaining
the income."

Lumen

exaisle wrote: »

That isn't my understanding.....

From the Revenue website:

"In establishing whether the income arising in respect of residential
accommodation and ancillary services (see paragraph 5.2) exceeds the exempt limit, the gross amount of that income is taken into account. No deduction is allowed for any expenses that have been incurred in connection with obtaining
the income."

That just means that the expenses can't bring you back under the limit.

exaisle

Lumen wrote: »

That just means that the expenses can't bring you back under the limit.

Exactly. Which contradicts Simona1986's earlier post which I quoted.

y0ssar1an22

rent rebate to tenants?

y0ssar1an22

you can also elect not to claim rent a room (you will see his occasionally when people have large rental expenses), that will result in rental loss

Alkers

y0ssar1an22 wrote:

you can also elect not to claim rent a room (you will see his occasionally when people have large rental expenses), that will result in rental loss

Sorry this is what I mean, you can opt out of the relief and instead claim expenses. There are worked examples on the site where this works out more tax efficient.

gomamochi1

Garage conversion for rental income

The_Conductor

gomamochi1 wrote: »

Garage conversion for rental income

It has to be contiguous to a person's PPR- it cannot be a separate structure.

Askthe EA

The_Conductor wrote: »

It has to be contiguous to a person's PPR- it cannot be a separate structure.

Indeed, but an internal door (be it permanently locked or not) ticks that box right?

The_Conductor

Askthe EA wrote: »

Indeed, but an internal door (be it permanently locked or not) ticks that box right?

Yep, it does.