Homeowners hoping to tap into a windfall of up to €12,000 by letting out rooms in their homes on Airbnb and similar sites have had their hopes dashed by Revenue.

Amendments to the long-standing Rent-a Room relief clarify that short term lets to guests, “including where such accommodation is provided through online accommodation booking sites”, do not fall within the terms of the relief.

However, the new guidance issued by Revenue confirms that letting a room out to students during the academic year is covered under the scheme, as long as the income received falls under the threshold.

The practice of letting out part of a home has increased in recent times.

The Rent-a-Room scheme, introduced in 2002, allows people to receive income of up to €12,000 in any tax year without that money being liable to income tax, PRSI or the universal social charge (USC).

Revenue said that short-term lets had never fallen within the scheme , which is designed for “residential purposes”. However, following a number of queries on the issue, it thought it prudent to clarify the position at a time when the relief was being amended.

Anyone letting out their home on Airbnb or similar websites is required to treat any rental received as trading income, just as if they were running a guesthouse.

The main amendment to the scheme was to increase the threshold to €12,000 per tax year from €10,000 previously. This change was signalled in the budget. When originally introduced, the income limit on the scheme was €7,620.

If the gross income from renting a room or rooms in any year exceeds the €12,000 threshold, all the rental income is subject to tax, PRSI and USC.

Previous changes to the rules had ruled out rent received from an adult child – though not rent paid to a person by other family members, such as nephews/nieces or grandchild.

Money paid by someone who is either a boss or employee is also excluded, such as income from work colleagues.