Published on August 22nd, 2016 | by Martin Clancy
Can your spare room be College Digs?
Let digs to students and earn tax free rental income.
By letting out empty room in their house as college 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.
There aren’t a lot of bed spaces for rent at the moment so even though you’re not paying tax, you’re doing a social good for Ireland. Research shows that more and more people are deferring college because they can’t find a place to rent.
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.
Law Student, JEFF WARD: I was 17 when I started at Trinity College so staying in ‘Digs’ was the perfect option for me because it allowed me my first taste of freedom by living away from home in Dublin, but just with all the benefits of living at home! Coming back to a freshly made home-cooked meal everyday was a dream compared to the student food that my friends survived on and it was great not having to worry about paying a whole load of household bills after paying rent. I had a great experience staying in Digs and ended up staying there for two years, and my brother stayed there for four years. I would highly recommend it to any student, in particular those who are moving to Dublin for the first time.