Budget 2027 · announced 6 October 2026
The Rent-a-Room scheme in Ireland, now for garden homes
Budget 2027 (6 October 2026) extended Rent-a-Room relief to new detached garden homes of 32–45 m² built under Class 3A, backdated to 27 July 2026. The tax-free annual limit rises from €14,000 to €16,000 from 1 January 2027.
Announced in Budget 2027 — subject to the Finance Act and Revenue guidance. Announced in Budget 2027 and subject to the Finance Act and Revenue guidance, which will set out exactly who qualifies and on what conditions. This is general information, not tax advice — your accountant can confirm how it applies to you.
What changed
The relief, at a glance
- Covers
- New detached garden homes of 32–45 m² built under Class 3A
- Backdated to
- 27 July 2026, the day Class 3A came into operation
- Tax-free limit
- €14,000 a year now, rising to €16,000 from 1 January 2027
- Status
- Announced in Budget 2027 — subject to the Finance Act and Revenue guidance
Who qualifies
What has to be true
- 01
The garden home is new, detached, 32–45 m² and built under Class 3A in the rear garden of your main house.
- 02
You live in the main house as your sole or main residence (also a Class 3A condition).
- 03
The person living there is a licensee, not a tenant. Rent paid by your own child does not qualify.
- 04
Everything they pay you counts towards the limit, including charges for meals, laundry or utilities.
- 05
Longer stays only: short-term guests are excluded, and Class 3A bans short-term letting anyway.
The limit and the tax cliff
€14,000 now, €16,000 from 2027
The limit is on gross income — everything the person living there pays you in the tax year, including charges for meals, laundry or utilities. For 2026 it is €14,000, and garden home income counts from 27 July 2026. From 1 January 2027 it rises to €16,000 a year.
If your gross Rent-a-Room income for the year goes over the limit, even by €1, the whole amount becomes taxable, not just the part over the limit.
Your accountant can confirm how this works alongside your other income.
Licence, not tenancy
A licensee, like a lodger
Rent-a-Room relief is built around licence arrangements: the person living in the garden home is a licensee, like a lodger, not a tenant.
Put the arrangement in writing — a solicitor can draw up a licence agreement — and check Revenue's guidance for garden homes once it is published.
No short-term letting: Class 3A condition 19 rules it out, so this is for longer stays only. The garden home also stays occupied together with the main house and can't be sold separately.
Our sizes
Which Nua Living sizes can qualify?
- Garden Studio · 25 m²Does not qualify
The Garden Studio does not qualify: it is a Class 3 garden room, not a dwelling, and cannot be lived or slept in.
- 1 Bed Granny Flat · 33 m²Can qualify
Inside the 32–45 m² band, when built under Class 3A and your site meets the conditions.
- 1 or 2 Bed Granny Flat · 45 m²Can qualify
Inside the 32–45 m² band, when built under Class 3A and your site meets the conditions.
- 2 Bed Granny Flat · 48 m²Not covered as announced
Outside the 32–45 m² band, so it is built with planning permission rather than Class 3A.
Worked example
The 33 m² 1 Bed Granny Flat, step by step
Our fixed price and the relief rules only. We don't publish rents, yields or returns — what you charge is your decision, and your accountant can confirm the tax position.
- Build price
- €93,900 + VAT @ 13.5%, before site works, connections and professional fees
- Planning route
- Class 3A exemption (32–45 m²), subject to your site meeting the conditions
- Tax-free limit
- €14,000 for 2026 (from 27 July 2026); €16,000 a year from 1 January 2027 — subject to the Finance Act
- What you charge
- Your decision. Everything the occupant pays counts towards the limit.
- Over the limit?
- The whole amount becomes taxable, not just the part over the limit.
- Next step
- Your accountant can confirm how the relief applies to your income.
Good to know
Rent-a-Room relief: common questions
What is the Rent-a-Room scheme in Ireland?+
Rent-a-Room relief lets you earn rent from a licensee living in your home tax-free, up to €14,000 a year, rising to €16,000 from 1 January 2027. Rent-a-Room relief is built around licence arrangements: the person living in the garden home is a licensee, like a lodger, not a tenant. Budget 2027 extended it to new detached garden homes of 32–45 m² built under Class 3A, backdated to 27 July 2026. Announced in Budget 2027 — subject to the Finance Act and Revenue guidance.
Does Rent-a-Room relief apply to garden homes?+
Budget 2027 (6 October 2026) extended Rent-a-Room relief to new detached garden homes of 32–45 m² built under Class 3A, backdated to 27 July 2026. The tax-free annual limit rises from €14,000 to €16,000 from 1 January 2027. Announced in Budget 2027 and subject to the Finance Act and Revenue guidance, which will set out exactly who qualifies and on what conditions. This is general information, not tax advice — your accountant can confirm how it applies to you.
How much can I earn tax-free?+
Up to €14,000 for 2026 (garden home income counts from 27 July 2026) and up to €16,000 a year from 1 January 2027, subject to the Finance Act. Everything the occupant pays you counts, including charges for meals, laundry or utilities. If your gross Rent-a-Room income for the year goes over the limit, even by €1, the whole amount becomes taxable, not just the part over the limit.
Is the person living there a tenant?+
Rent-a-Room relief is built around licence arrangements: the person living in the garden home is a licensee, like a lodger, not a tenant. Put the arrangement in writing; a solicitor can draw up a licence agreement, and Revenue's guidance for garden homes should confirm the detail.
Can I rent out the Garden Studio?+
The Garden Studio does not qualify: it is a Class 3 garden room, not a dwelling, and cannot be lived or slept in. It is for use with your home, as an office, studio, gym or hobby room.
Does the 48 m² 2 Bed Granny Flat qualify?+
Not as announced. The extension covers 32–45 m² garden homes built under Class 3A; that size is outside the band and built with planning permission. Your accountant can confirm how any other letting income would be taxed.
Can I use it for holiday or Airbnb lets?+
No. No short-term letting: Class 3A condition 19 rules it out, so this is for longer stays only. Rent-a-Room relief also excludes short-term guests.
Is this law yet?+
Not yet. It was announced in Budget 2027 on 6 October 2026 and takes effect through the Finance Act, with Revenue guidance setting out the detail. Check Revenue's guidance once it is published, and ask your accountant before you rely on it.
Sources
- The Irish Times — Budget 2027: the main points (6 October 2026)
- SelfBuild — Budget 2027: what it means for self-builders and home improvers
- Revenue Tax and Duty Manual Part 07-01-32 — Rent-a-Room Relief
- Revenue — Rent-a-Room relief
Announced in Budget 2027 and subject to the Finance Act and Revenue guidance, which will set out exactly who qualifies and on what conditions. This is general information, not tax advice — your accountant can confirm how it applies to you.