Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The rent-a-room scheme was introduced in Finance Act 2001. The scheme allows an exemption from income tax on rent received where a person rents out a room or rooms in his or her principal private residence, and the rent received does not exceed €10,000 per year (€7,620 up to and including the 2007 tax year). In order to qualify for the exemption, it is necessary for the residential premises to be situated in the State and occupied by the individual as his or her sole or main residence during the tax year.

In 2007, the rent-a-room scheme was amended so that the exemption would not be available to parents who rent a room or rooms to one or more of their children. In such cases, the parents will have to declare their rental income on their annual tax return, net of allowable expenses, and pay any income tax arising. The rent-a-room scheme was introduced as an incentive to encourage individuals to let rooms in their principal private residence. It was never envisaged that the scheme would cover the situation of children living with their parents in the family home. The purpose of the 2007 amendment was to ensure that the exemption is only granted for the purpose for which it was originally intended.