Renting a room in your home can earn you up to €14,000 in tax free income.
The scheme was introduced some years ago as the Government looked for ways to tackle the housing crisis but remains relatively unknown despite the huge amount of cash people can earn from it.
“The rules are quite strict. It’s available to homeowners - so it’s not for landlords or people with second properties,” journalist Sinéad Ryan explained to Lunchtime Live.
“So you must live in the home itself - it’s your home. You’re living there all the time and you’re simply renting out a room in the house that you own.
“You can earn up to €14,000 total income per tax year.
“However, if you earn more than that, there’s income tax charged on the whole lot.”
One important detail is that even though the rent is not taxed, you still have to declare it to Revenue:
“A lot of people think if I’m not paying tax on it I don’t have to tell anybody about it,” Ms Ryan added.
“That’s not the case. You get the relief by declaring the income and then there’s never going to be problems down the road.”
The scheme only applies to long-term rentals - so cash earned from Airbnb will not count and will be taxed at the usual rate.
However, as you will be living with the person, Ms Ryan says it is helpful to be careful about who you rent to and to lay out ground rules beforehand:
“You can set whatever rules you want around access to common areas, if they can have visitors in, laundry, board meals - you get to choose,” she continued.
“It’s not set down in law anywhere and I would advise anybody doing this for the first time to absolutely set down in writing with your tenant, how you want to live together.”
Many of the people who benefit from the scheme are students; the Provost of Trinity College recently said that the lack of affordable housing in Ireland has eroded the quality of student life in Ireland and USI says students are choosing not to study certain course because of money worries:
“You should be able to have the full scope of course available to you,” USI President Beth O'Reilly told Newstalk.
“But ultimately, we’re just seeing that that’s just not the case.
“There’s so many students who are choosing not to study in Dublin as a result of the high prices.
“And as a result you’ve got a lot of students who might be really passionate about a certain course area and not able to study it further.”
Main image: Euro notes.