Published on August 21st, 2016 | by Martin Clancy
Let to a student and get a taxbreak!
Let digs to students and earn tax free rental income.
1,000s of Leaving Cert graduates from the class of 2016 will need a new place to stay in a few weeks. But a cursory glance at the available data shows the difficulty of finding one. There were just 3,600 homes to rent nationwide on August 1st — 1,000 fewer than on the same date a year previously. The numbers for Dublin are lower still, with just 1,100 properties available to rent at the start of May.
By letting out empty room in their house as digs, Irish homeowners can put more bed spaces on the market tomorrow than any other stakeholder – including Government. Under the existing legislation, you can do this without going through a lengthy bureaucratic process and you’re also guaranteed tax relief. The rental income on student digs is exempt from tax as long as it’s for a lease longer than 6 months and does not exceed €12,000 in a tax year.
The lack of paperwork involved and the financial incentives means that it is possible and profitable to increase student housing in this way in a very short space of time. But the scheme suffers from a lack of profile. That’s why students from University College Dublin, Trinity College Dublin & Daft media are working together to increase awareness about the details of the scheme, listed below.
What are the facts on Rent-A-Room relief for digs?
Firstly, your home must be located in Ireland and you must occupy it as your sole residence.
You qualify for the relief in cases of residential tenancies, not short-term lets. Whomever takes the room, must be using it for a long-term rather than a short-term basis. For instance, renting the room out to a student over the course of a college year is covered, but taking different people in every weekend is not.
You’re now exempt from paying tax on any of that rental income unless you pass the cap of €12,000 in any one tax year.
Rent-a-room relief will not affect your mortgage interest relief or your exemption from Capital Gains Tax (CGT) if you sell your home.
To find out more information on Rent-A-Room Relief check out Revenue.ie.
Arts Student, Conor Viscardi: My first digs was by the N11 and 5 minutes of a walk from good UCD bus routes like the 145, and the 46A. I wouldn’t have been able to afford renting there but the digs was cheaper, especially as I could sign for 9 months instead of 12. People may feel that staying with a family will be a bit awkward and intrusive. My experience was anything but that. The family I stayed with were friendly and we weren’t in each other’s hair much. We talked about anything that might be a problem early on and so there wasn’t any hassle. I’d nearly always stay with friends if I was planning on a late night and they weren’t bothered by the odd time that I couldn’t. If you talk it out at the start then digs works just like a normal house-share.