The Rent-a-Room scheme, which begins next week, has been billed as a measure to help ease current housing pressures. It's an opportunity for many home owners who are already renting to regularise their tax position.

Most of these are recent house buyers who can barely afford to pay a mortgage without some additional income. But, will the scheme create a new stream of accommodation from those who have held back from renting to date for tax reasons?

In his second stage speech on the Finance Bill 2001, Finance Minister Mr McCreevy said the fact that such rental income is taxable is often a barrier to spare accommodation being rented out.

This is obviously difficult to quantify as there are many other reasons why people would choose not to share, not least the fact that sharing living space can be a strain.

Anecdotal evidence suggests that most of the income being earned by accommodation sharing homeowners is not declared.

To qualify for the scheme, the person's house or apartment must be situated in the State and must be occupied by the individual as his or her sole or main residence.

In Department of Finance speak, "where a room or rooms in a person's principal private residence is let as residential accommodation and the gross annual rental income is less than £6,000, the rental income will be exempt from tax."

That ceiling is £4,440 for the short tax year April to December 2001.

That works out at £500 per month rental income. The "relevant sum" includes sums arising in respect of meals, cleaning, laundry and other similar goods and services connected with the use of a room, or rooms, for the purposes of residential accommodation.

One key point to bear in mind is that the relief only applies when the rent does not exceed £6,000. If it exceeds £6,000 it is all taxable.

The relief will not effect full entitlement to Capital Gains Tax relief on the principal private residence if the property is subsequently sold. Mortgage interest relief is also unaffected by the Rent-a-Room scheme.

Mr McCreevy has stated that the Government is concerned to ensure there is a supply of good standard accommodation in the private rented sector.

The tenants' rights advocacy group Threshold believes renting a room in your own home is not a long-term solution to the housing problem for either party.

Mr Kieran Murphy of Threshold said he was not convinced that this measure would affect supply as owner occupiers renting rooms was already an established practice.

"The scheme should ease the situation of homeowners who are concerned about their tax position but renting a room to support a mortgage could put a home-owner in a very vulnerable position," he said.

According to Mr Murphy, the relationship between landlord and tenant needs to be a professional one in the interests of both parties.

No doubt the scheme will suit some homeowners and will bring a number of first-time lettings to the market. Where it is used as an additional source of income, it would be less of a problem if things didn't work out.

Remember that even if you do not have to pay any tax, you are still obliged to make a tax return detailing the rental income.

If two people own a house jointly, the £6,000 allowance is split between them.