Taxpayers flocked to the rent-a-room scheme to avoid tax and boost their incomes as austerity hit and tax burdens rose, new figures from the Revenue Commissioners show.
According to the figures, the numbers availing of the scheme soared by 180 per cent between 2004 and 2015, as homeowners across the country sought to boost their income without increasing their tax liabilities.
The scheme allows people to earn up to €14,000 without paying any tax from renting out a room in their property. Prior to 2014 the limit stood at €10,000, but it was subsequently increased, to €12,000 in 2015 and €14,000 in 2017, as the Government sought to ease the housing crisis by incentivising homeowners to let a room in their properties.
In 2004 just 2,300 homeowners availed of the scheme – or disclosed to the Revenue that they were doing so – at a cost, in tax forgone, of some €2.7 million to the exchequer. However, as the impact of successive austerity budgets hit home, and taxpayers faced paying tax of as much as 55 per cent on their incomes, more decided to avail of the scheme. By 2012 users of the scheme had more than doubled, while by 2015, the most recent year figures are available for, the numbers had soared to 6,460.
Back in 2004, tax forgone per household amounted to €1,173. By 2015 this had shrunk to €1,068.
How many people avail of the rent a room tax relief?
Year €m in tax forgone # of cases
2004 2.7 2,300
2005 3.3 2,820
2006 3.9 3,560
2007 4.7 3,180
2008 5.6 3,600
2009 5.6 3,770
2010 5.3 3,770
2011 5.6 3,920
2012 8 5,250
2013 8.3 5,730
2014 9.3 5,710
2015 6.9 6,460
Source: Revenue Commissioners
