Additional Case V Interest Deduction

Q. I currently have a residential rental property and I understand that I may be better off from a tax perspective if I rented my property to social housing tenants. Is this correct?

2nd June 2016

One of the allowable tax deductions when calculating your taxable income from the rent of a residential property is the interest you have paid on any loan used to purchase, improve or repair the property.

 

The rules state, however, that you are only allowed to deduct a maximum of 75% of the interest paid. The remaining 25% is not allowed as a deduction against your taxable income.

 

In the last budget a new measure was introduced whereby a landlord could get a tax deduction for the full 100% of the loan interest where the property was let to a tenant on a social housing scheme for a period of three years.

 

The extra tax deduction can be claimed at the end of the third year once all the relevant criteria are met. One of these criteria is that you must notify the PRTB in a prescribed form of your intention to avail of this scheme at the outset of the tenancy.

 

Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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