Ivana Bacik (Dublin Bay South, Labour)
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83. To ask the Minister for Finance if he will make a statement on the adequacy of the rent a room scheme in the context of supply of housing; and his views on the accessibility of the scheme for persons seeking to offer accommodation under the scheme. [11837/23]

Ivana Bacik (Dublin Bay South, Labour)
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87. To ask the Minister for Finance his views on the adequacy of the rent a room scheme. [11838/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 83 and 87 together.

The 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 2023. Although the relief applies automatically, the amount of exempt rental income 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.

The number of taxpayer units which availed of the Rent a Room relief scheme in respect of the 2004 year of assessment, the earliest year which data are available, was 2,300. Since then, the uptake in the numbers availing of the scheme has increased substantially.

The following table sets out data on the number of taxpayer units availing of the scheme, together with the Exchequer cost of the relief for the years 2016 - 2019 (the latest year for which data are available).

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.

My Department is not aware of evidence which suggests that the current scheme is difficult for tax payers to access.