Grace Boland (Dublin Fingal West, Fine Gael)
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591. To ask the Minister for Finance if he will give due consideration to raising the rent-a-room tax-free threshold, which has not increased since 2017, to encourage more homeowners to take up the scheme, thereby increasing the availability of rental supply; and if he will make a statement on the matter. [47053/25]

Grace Boland (Dublin Fingal West, Fine Gael)
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592. To ask the Minister for Finance if he will give due consideration to expanding the rent-a-room scheme to include buildings such as converted garages which are not attached to the sole or main residence, as is currently required, but are within the curtilage of the residence; and if he will make a statement on the matter. [47054/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 591 and 592 together.

Rent-a-Room relief, which is provided for in section 216A Taxes Consolidation Act 1997 (TCA), was introduced in 2001 with the aim of increasing the availability of rented residential accommodation. The relief acts 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.

Section 216A TCA provides that, where an individual rents a room or rooms in her/his home as residential accommodation, and the gross rent received (including sums for food, laundry or similar goods and services) does not exceed €14,000 in the tax year, s/he is treated for income tax purposes as having neither profits nor losses from the payment for that accommodation.

In accordance with section 216A TCA, 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 at present of €14,000 per year. Although the income is exempt it must be included in the individual’s tax return for the year in question.

The room(s) being let can comprise a self-contained unit within the residence such as a basement flat or a converted garage attached to the residence and still qualify for Rent a Room relief. However, a self-contained unit that is adjacent to the residence but not attached to it cannot qualify for the relief.

Rental income which is not eligible for Rent-a-Room relief, for example where the amount exceeds €14,000 or where the self-contained unit is not attached to the residence, is subject to Schedule D Case V income rules. The income, after deduction of allowable letting expenses, is subject to tax as part of the individual's total taxable income. In this way, individuals who are landlords may be subject to income tax at their marginal rate of tax in addition to which USC and PRSI will also apply.

The Rent-a-Room scheme was considered as part of the Tax Strategy Group process in 2023. At the following link: assets.gov.ie/263923/a28365ed-af44-4501-a0f0-f79a1024ba63.pdf#page=null

Further information on rent-a-room relief can be found in Tax and Duty Manual Part 07-01-32 at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf. In addition, annual statistics on rent-a-room relief from 2004 to 2022 are available on the Revenue website at www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/costs-tax-expenditures.pdf.

As the Deputy will appreciate, any revisions to the scheme would have to be considered as part of the annual Budget and Finance Bill processes and take into account the effective operation of the scheme and the impact any proposed changes would have on the broader housing market. Furthermore, it is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters which might be the subject of Budget decisions.