Dáil Éireann Debate, Wednesday - 30 March 2022
28. Deputy Catherine Murphy asked the Minister for Finance the way the income from renting garden shed-type accommodation is treated from a taxation perspective; if it is treated as a registered standalone private dwelling at the same address; if it is treated as a rent a room in a dwelling context; and if he will make a statement on the matter. [16898/22]
Amharc ar fhreagraI am advised by Revenue that rent payments for standalone accommodation on an individual’s property are subject to taxation in the same manner as any residential property that is let by its owner.
Section 97(1) Taxes Consolidation Act (TCA) 1997 sets out the rules for computing rental profits or gains in such circumstances. Landlords are entitled to deduct certain expenses from the gross rental income received and are then taxed on the balance, which is the rental profit. Generally, expenses which are capital in nature are not allowable as deductions unless they fall into the category of “plant” for the purposes of section 284 TCA and can be claimed as capital allowances (over eight years at 12.5% of the allowable cost per year). However, the expense must have been incurred wholly and exclusively for the purposes of the business of letting the property.
In all cases involving the letting of property by an individual, if the net rental income (gross rental income minus expenses) is less than €5,000 and if the landlord’s only other source of income is employment income, he/she must declare the rental income by filing a Form 12 return. If the net rental income is over €5,000, the landlord must register for self-assessment and declare the rental income in a Form 11 return. Returns of income must be submitted by the return filing date for the year of assessment in question.
Further information on the tax treatment of rental income can be found on the Revenue website at revenue.ie/en/property/rental-income/irish-rental-income/index.aspx.
While it is not a matter for my Department, I understand that such ‘garden shed’ type accommodation should be registered with the Residential Tenancies Board (RTB) as it would not appear to fall within the RTB’s definition of exempt properties.
I am further advised that rent payments for standalone accommodation on an individual’s property will not qualify for rent-a-room relief because the accommodation is a self-contained unit that is not part of the ‘sole or main residence’ of the individual receiving the rent. To qualify for rent-a-room relief, the room or rooms being let must form part of the residence occupied by the individual receiving the rent as her/ his sole or main residence during the tax year. ‘Sole or main residence’ is best described as an individual’s home.
