The "Rent A Room Scheme" was introduced by the Finance Act 2001. Its main aim was to increase the availability of rented residential accommodation and permitted a person to let a room (or rooms) in their principal private residence, with gross annual rental income of up to 10,000 being exempt from tax.

Where a room (or rooms) in a person’s sole or main residence is (are) let as residential accommodation, gross annual rental income of up to €7,620 in 2007 and €10,000 in 2008 is exempt from tax. Relief in respect of mortgage interest relief is not affected. The relevant Capital Gains Tax/Stamp Duty provisions are also not affected.