Dáil Éireann Debate, Thursday - 8 September 2022
408. Deputy Brendan Griffin asked the Minister for Finance if he will address the case of a person (details supplied) regarding the rent a room relief; and if he will make a statement on the matter. [43925/22]
Amharc ar fhreagraThe 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, the Rent-a-Room scheme provides that an individual who lets a room or rooms in their sole or main residence within the State 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.
According to Revenue's Tax and Duty manual on the relief (available at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf), in general, an individual’s sole or main residence is that individual’s home for the greater part of the time and where friends and correspondents would expect to find said individual. A person is considered to be resident in Ireland for tax purposes if they are present in Ireland for 183 days or more in a tax year or 280 days or more in total, taking the current tax year plus the preceding tax year together. As such, Irish citizens who are not tax resident in Ireland would not currently be entitled to claim Rent-a-Room relief because a dwelling within the State would not be considered to be their sole or main residence during the tax year.
I have no plans at present to change the Rent-a-Room scheme as suggested. 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. These 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.
