Student accommodation: Homeowners renting out rooms doubles in a decade

The number of people letting out rooms in their homes has more than doubled in a decade, tax relief figures suggest.

While there is no indication how many of these homeowners are renting to students, the Revenue Commissioners data predates campaigns to have more people avail of tax exemptions for owner-occupier landlords.

In 2004, just 2,300 people declared rental income under the rent-a-room tax relief scheme to the taxman.

That number passed 5,700 in 2013 and 2014, even before the ceiling on tax-free earnings was raised from €10,000 to €12,000 a year. Between 2002 and 2007, the annual limit on exempt rental income was €7,620.

Student accommodation: Homeowners renting out rooms doubles in a decade

As well as the potential impact of more students returning to traditional ‘digs’ accommodation due to difficulties finding affordable rents, the rise in recent years could also be a result of the economic crash.

The numbers who rented rooms jumped by nearly a quarter from less than 3,200 to 3,920 between 2007 and 2011. During these years, some of the worst effects of the recession and job losses took hold and many people offered rooms to rent to assist with mortgage repayments.

However, there was a further spike in 2012, when 5,250 people declared income from renting in their own homes, a third more than the previous year.

Analysis of the data also gives a rough indication of the levels of income being earned, although the amounts are not provided by the Revenue Commissioners. But the average annual relief granted in 2007 was nearly €1,500, or over one-third more than the year before.

The income on which relief is based may vary depending on each claimant’s personal taxation circumstances, but could be worth between 20% and 40% of the amount earned.

Using a mid-range figure of 30% to estimate income, the relief figures suggest an increase in average rent-a-room earnings from around €3,650 in 2011 to nearly €5,500 in 2014, when the average relief was more than €1,600.

Student accommodation: Homeowners renting out rooms doubles in a decade

Any increases could be due to rises in the rents being charged by homeowners, or people increasing the number of rooms they let, or a combination of both.

The Revenue Commissioners were unable to provide a statistical breakdown of numbers by county or postal district which might point to any increases in towns or areas in or near college campuses.

The rules of the tax relief scheme mean that, although any rental income under €12,000 attracts no tax liability, if earnings go above the threshold it is all taxable.

However, if that arises, a homeowner can deduct some allowable expenses before calculating the taxable profit.

The earnings may also include any additional charges for extras such as provision of meals, laundry, or other similar services.

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