If you let a room (or rooms) in your sole or main residence as residential accommodation and the gross amount received (“relevant sums”), including monies for food, laundry or similar goods and services, does not exceed the limit for the year of assessment (currently €12,000 per annum), the profits or losses on the relevant sums are treated as nil for income tax purpose.
Thus, these profits are disregarded for income tax, PRSI and USC purposes (Universal Social Charge (USC) replaced income and health levy with effect from 1/1/2011). Losses can’t be offset against rental profits from other lettings.
Total relevant sums are a gross figure, i.e. no account is taken of any expenses incurred in generating the relevant sums.
With effect from 1 January 2010 rent-a-room relief does not apply to payments received either directly or indirectly by an individual, or a person connected with the individual, in respect of accommodation provided in the family home where that individual is an office holder or employee of the person making the payment or of a person connected with the payer.
For example, relief is not due where an individual receives payment from his/her employer in respect of accommodation provided by the individual in his/her family home, for individuals visiting the employer for work related or training trips.
The relief does not affect your entitlement to mortgage interest relief nor capital gains tax exemption on the disposal of your residence.