Dáil Éireann Debate, Wednesday - 11 May 2022
81. Deputy Emer Higgins asked the Minister for Finance if he will consider increasing the tax exemption for those renting a room in their home to encourage persons to rent a room in their home to those coming to Ireland from Ukraine. [23764/22]
View answerThe rent-a-room scheme was introduced in Finance Act 2001 as an incentive to encourage individuals to let rooms in their principal private residence as residential accommodation in order to bring about an increase in the availability of rental accommodation.
In accordance with section 216A of the Taxes Consolidation Act 1997, an individual who lets a room or rooms in her or his sole or main residence as residential accommodation may be exempt from income tax, PRSI and USC in respect of income from the letting where the aggregate of the gross rents and any sums for meals or other services supplied with the letting does not exceed the threshold for the year in question, which is €14,000 for 2022. Although the income is exempt it must be included in the individual’s tax return for the year in question. This relief does not apply to companies or partnerships.
Initially, in 2001, the upper income threshold was set at £6,000 but this has been increased several times over the intervening period (most recently in Finance Act 2016) to €14,000.
My Department is not aware of evidence which suggests that the current ceiling is insufficient or is giving rise to a disincentive effect. The figure of €14,000 would allow an individual to receive income of up to €1,166.66 per month under the scheme over a 12 month period without it giving rise to a tax liability. In 2018 (the most recent year for which data are available), some 9,240 individuals availed of Rent-a-Room relief at a tax cost of €19.7m to the Exchequer (i.e. an average tax saving per participant of some €2,100).
I have no plans at present to change the upper income threshold in the rent-a-room scheme.
Finally, and as the Deputy will appreciate, decisions regarding tax incentives and reliefs are normally made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. The guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures, where a tax-based incentive is more efficient than a direct expenditure intervention.
