Does room rent incur tax?:I am considering buying a two-bedroom apartment. As I will have a substantial mortgage I will need to rent a room for at least €800 a month. Do I have to declare this to the Revenue?
There are a few things to consider before we get onto the revenue issue. Many people buy property knowing that they will have to rent out a room to help pay the mortgage, which is fine. Where you are likely to get into trouble is if you absolutely need a room mate to pay the mortgage. Ask yourself if you could still meet the payments if you failed to find a roommate for a couple of months - this is a highly likely scenario as tenants, particularly at the higher end of the rental market, have a greater choice than ever before. Also your rental figure of €800 a month is on the high side for an apartment share unless you're talking about a seriously stylish, large and particularly well-located place - a penthouse in a new development is the sort of apartment that might attract his level of room rental.
Is your figure based on your mortgage requirements or your research into the likely rent for a similar apartment?
The Revenue permits you to rent a room without incurring tax, once the annual rent you receive does not exceed €7,500. You must still declare the rental in your annual return although no income tax is due. However your rental income, at €800 a month, puts you over this threshold which means that the entire rent is liable for tax.
The €7,500 limit covers any income earned in relation to the room. You cannot charge rent up to that level and then charge for electricity, phone, laundry, food , and so on, on top of it. The Revenue will simply add up anything you earn from the person who you are renting to and, if it exceeds €7,500, will tax you on the lot. It might be an idea to rethink your figures and also ask your lender to estimate what your repayments might be in the highly likely event of interest rate increases. This will also help you get a better picture of what you might be getting in to if you go ahead with this purchase.
Can furniture come out?
We will be putting our recently deceased mother's house on the market in September and there is some disagreement among my sisters as to whether we should leave the furniture in it or not. Some of my sisters are keen to divide up the contents before the auction. Is there an "official" view on what is the best way forward?
A house that is furnished will always look more appealing than one in which the furniture has obviously been recently removed. Clear the house of your mother's personal effects, such as family photos, crockery, glassware, small kitchen appliances, towels, the contents of drawers, wardrobes, and cupboards and the hotpress but every effort should be made to leave the rooms basically furnished - otherwise it is likely to look miserable. There is almost certainly extra furniture that could be taken out without leaving the place looking bare, occasional tables, extra chairs, a piano and so on. However selling your mother's house is an emotional rollercoaster and if leaving the furniture in the house is going to cause a rift among your sisters then it's not worth it. The house will sell either way.
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Unfortunately, it is not possible to respond to all questions received. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
