Rent-a-room relief and Airbnb: does it apply to short-term guests?

Rent-a-room relief is one of the most generous reliefs in the Irish tax system: up to €14,000 a year of income from letting a room in your home, free of income tax, PRSI and USC. It is also one of the most misunderstood by hosts, because it was never meant for holiday guests.

What rent-a-room relief is for

The relief covers income from letting a room, or rooms, in your sole or main residence as residential accommodation: a lodger, a student, someone in “digs”. Revenue’s conditions are:

• your gross income from the letting is within the €14,000 annual limit (the limit since 2017; it is shared if more than one person receives the income);
• the room is in a qualifying residence, the home where you live most of the time (you do not have to own it);
• each letting runs for more than 28 consecutive days, with a few exceptions.

The relief is not available on payments from your own child, or from your employer.

Why short-term guests are excluded

Revenue’s list of income the relief does not cover includes, in so many words, “short-term guests (including those who book accommodation through online booking sites)”.

The rule behind it dates from 1 January 2019: the relief does not apply to income from “letting periods which do not exceed 28 consecutive days”. Revenue’s manual adds that this “puts beyond doubt that the relief does not apply to short term tourist accommodation based on home sharing”, including “where it is provided through online booking sites”.

So a room let on Airbnb, Booking.com or your own website to guests who stay a few nights does not qualify, even in your own home, and even if your total is well under €14,000.

The exceptions are not holidays

Shorter lettings can still qualify when they are not for leisure or commercial purposes. Revenue’s examples are respite care, full- or part-time students (including language students), and “digs” of at least four consecutive days a week for at least four weeks. A tourist, a wedding guest or a weekend walker is not one of them.

Watch the limit if you also have a lodger

If you have a lodger who qualifies, the relief is all or nothing. When your gross income from qualifying lettings goes over €14,000, you are taxed on the whole amount, not just on the part above the limit. And even when the income is exempt, Revenue says the relief “does not remove the obligation to make a tax return”: you enter the exempt income on your return.

How short-stay income is taxed instead

Revenue does not treat income from guests who stay a few nights as rental income, because “the visitors use the accommodation as guests rather than as tenants”. It falls under one of two headings:

Your situation	How Revenue taxes it
You let a room or a property to occasional visitors now and then	Case IV, other income
You run it as an ongoing business, such as a B&B or guesthouse	Case I, trading income

Either way, there is no tax-free amount: your profit is taxable from the first euro, and you declare it on your tax return. Which case applies changes how you work out your profit and what you can deduct, so it is worth settling with an accountant before your first return. Our guide to tax on Airbnb and B&B income in Ireland goes through what to declare and keep.

Can you have both?

Possibly, but Revenue’s guidance does not say how the two mix. Student lettings for an academic year or term can qualify; short tourist stays never do, and Revenue’s manual adds that the relief “does not apply to room/s that are used for business purposes”. If you have a qualifying student or lodger and also take short-stay guests, keep separate records for each and check with Revenue or a tax adviser before you claim the relief.

Summary

• Rent-a-room relief: lodgers and students, more than 28 consecutive days, up to €14,000 a year, in your main home.
• Airbnb, Booking.com and B&B guests: not covered, since 2019, whatever the amount.
• Short-stay income: Case IV if occasional, Case I if you run it as a business.

This guide explains Revenue’s published rules in plain English. It is not tax advice: for your own situation, talk to Revenue or a tax adviser.