Rent-a-Room Relief: tax-free income from a lodger

Up to €14,000 a year from letting rooms in your home is free of income tax, USC and PRSI, rising to €16,000 from 2027.

If you let a room in the home you live in, the income can be completely tax-free under Rent-a-Room Relief. That means no income tax, no USC and no PRSI. The limit is €14,000 a year for 2026, rising to €16,000 from 1 January 2027, once Finance (No. 2) Bill 2026 is enacted.

The limit is all or nothing

The test is on gross income (all you receive): rent plus anything the lodger pays for meals, laundry or other services, before any costs. Stay within the limit and all of it is exempt. Go over by even a euro and all of it is taxed as ordinary rental income, though you can then deduct expenses.

If two of you share the income, such as a couple, the limit is split equally between you.

The conditions

• the room must be in your sole or main residence in Ireland; you can own it or rent it
• it must be used as residential accommodation, not for business
• rent paid by your own child (or your spouse's child) doesn't qualify; nieces, nephews and other relatives are fine
• since 2019, lets of 28 days or less don't qualify. The exceptions are a guest who is a student, someone incapacitated, or someone staying at least four days a week for four weeks. Short-term tourist lets through booking sites are excluded
• a self-contained unit counts only if it is attached to your home, like a converted garage

Garden homes from 2026

Budget 2027 extends the relief to detached homes in back gardens of 32 to 45 square metres. They must be built from 27 July 2026 under the new planning exemption. This applies once Finance (No. 2) Bill 2026 is enacted, back to 27 July 2026.

You still declare it

Exempt income still goes on your return: Form 11 line 416(a), or the exempt income section of Form 12 in myAccount. You can opt out of the relief for a year. You might do that if your costs would create a loss to use against other rent. You then claim the costs and wear and tear instead.

Work it out

• Rent-a-Room Relief →
• Tax on side income →

Sources

• Revenue: Rent-a-Room Relief (€14,000 limit) (checked 25/10/2026)
• Revenue: Tax and Duty Manual Part 07-01-32: Rent-a-Room Relief (gross income test, PRSI and USC exemption, examples) (checked 24/10/2026)
• Citizens Information: Budget 2027 (checked 25/10/2026)
• Government of Ireland: Budget in Brief 2027 (checked 25/10/2026)

General information, not tax advice. HeyPenny is not a tax agent.