Tax On Rental Income
If you rent out your home or an investment property you will have to complete a self assessed income tax return before October 31st and pay any tax due even if you are a PAYE worker.
Broadly speaking you will have to pay Income Tax and PRSI on any profit made on rental income. You come to your profit (or loss) figure by deducting all allowable expenses of maintaining the property from the gross rental income.Here we look at common issues for landlords.
PRTB
First things first, it is important that you register with the Private Residential Tenancies Board, (PRTB) If you are not registered with the PRTB you will not be allowed to claim some reliefs so it is important you do this. Remember too that you have to pay what’s known as the NPPR fee on a rented property, you can do this here https://www.nppr.ie/default.aspx.
Mortgage Repayments
It is important to stress that only the interest you are repaying on your mortgage is allowed as a deduction and for residential property this is now limited to 75% of interest. You cannot claim relief on any of the capital repayments you make against your mortgage. This is very important because lots of landlords include the capital repayments in their tax return and as such wrongly calculate their liability.
What can I claim as expenses?
In calculating your tax on rental income be sure to include any allowable expenses. But what expenses are allowable? If you placed ads to rent out the property you can claim this as a deduction. Likewise if you purchased furniture it’s important to include capital allowances for these in your return. Lastly, remember if you are renting a room out in your home you can receive income of up to €10,000 tax free. If you exceed this threshold the full amount becomes taxable.
Foreign Rental Property
If you own property abroad you will need to file two income tax returns, one in Ireland and another in the country where you have invested and pay any taxes on profits due. In the case of the UK, The Irish Revenue will allow a credit against the Irish tax liability on the U.K. rental income for the tax paid in the U.K, so you will not double pay.
To ensure that all of your affairs are in order with your tax return contact us today
