Can I claim rent-a-room relief on son’s college flat?

I purchased an apartment in Galway over a year ago as my son was commencing college there. He has lived in the apartment and taken care of it for me. Occasionally I visited and stayed in the spare room.

However, he would now like to have a flatmate in the spare room. If this goes ahead, will I be taxed on it as it is a second home for me or will it be eligible for taxation purposes under the rent-a-room scheme?

Ms EC, email

The first key thing is the status of the property. You say you bought it when your son moved to Galway for college and also that you visit occasionally. The clear understanding is that this is not your main home, or principal private residence in official Revenue parlance. If it is not your main home, it is automatically considered to be an investment property.

That being the case, it is subject to a different structure for tax and other purposes. More importantly, for the purposes of your immediate query, is that the rent-a-room relief applies only to people who are letting out a room in their main, or only, family home.

Interestingly, according to the Revenue, you do not even need to own your home in order to claim rent-a-room relief – ie it could be used to defray the rapidly rising cost of rent – but it cannot apply to a property that is effectively an investment, such as this Galway apartment.

The relief, where is does apply, is very useful as you are exempt from all income tax, universal social charge (USC) and PRSI on any income received up to a maximum of €14,000 annually.

Contractor not an issue for self-builds under Help to Buy

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Set threshold

This threshold is important. Go over it and every penny suddenly becomes liable for tax, so you want to get the figures right.

The other important thing with rent-a-room relief is that you cannot use it to relieve income received under short-term lets – like Airbnb, for instance – from tax.

Anyway, useful as it is, having your son’s friend take a room in your Galway apartment will not qualify under rent-a-room relief.

More importantly, with a paying tenant, you effectively become a landlord. That brings both administrative and tax issues to the fore for you.

First up, all landlords are required to register their tenancies with the Residential Tenancies Board – rtb.ie – and they will have to create an account with the agency to do so.

They are also required to pay tax, USC and social insurance on any rental income received. There are certain expenses that can be set against rent received before calculating tax. These essentially are costs directly incurred in letting the property or fitting it out.

Finally, when your son finishes college or at some later date when you are looking to sell the apartment, you will be liable to capital gains tax.

Of course, if your son owned the apartment, it would, presumably, be his main residence and he could avail of rent-a-room relief – within the limits – for letting out a room to a student friend, but that’s a whole different story.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice