Rental Property Tax

You’ve bought the rental property, received the keys, and are getting ready to rent it out. 

Rental Property Tax Services

As it’s an investment property you will be liable to rental property tax on the net income after deducting any allowable expenses. You will want to keep this liability to a minimum and it’s important to be aware of your rights and responsibilities as a landlord.

Register with the Private Residential Tenancies Board

Firstly, you need to register with the Private Residential Tenancies Board (PRTB) within one month of the date you first rent out the property. The annual fee for this registration is €90. It’s very important to do this, especially if you want to claim interest expense for a mortgage on the property. You will not be allowed to make this claim against your tax if you are not registered.

​Calculating net rental income

You will need to pay tax on any rental property profit. Your rental profit (or loss) is calculated based on the rent money that you actually receive in the tax year. You can offset any allowable expenditure against the rent money received. A separate calculation must be made for each letting if you own more than one rental property. 

All records must be kept for a period of at least 6 years such as invoices, bank statements and receipts. 
The following are examples of expenditure you may deduct when calculating your rental property tax:
  • Auctioneer’s fees, advertising fees and legal expenses incurred on first lettings
  • Rents payable by the landlord in respect of the property, e.g. ground rent
  • Rates payable to a local authority in respect of the property
  • PRTB annual registration fee
  • Cost of any service or goods you provide and for which you do not receive separate payment from your tenant, e.g. gas, electricity, central heating, telephone rental, cable television, water and refuse collection
  • Maintenance of the property, e.g. cleaning and general servicing, exterior and interior painting and decorating
  • Insurance of the premises against fire, public liability insurance, etc.
  • Management fees, e.g. the actual cost of collection of rents and advertising for tenants, legal fees to cover the drawing up of leases or the issue of solicitors letters to tenants who default on payment of rent.
  • Accountancy fees incurred for the purposes of preparing a rental account
  • Repairs, (a ‘repair’ means the restoration of an asset by replacing subsidiary parts of the whole asset). Examples of common repairs which are normally deductible in computing rental income include:
    • damp and rot treatment
    • mending broken windows, doors, furniture and machines
    • replacing roof slates
  • Interest on money borrowed to purchase, improve or repair the let property
  • Certain mortgage protection policy premiums
  • Expenditure incurred between lettings in certain circumstances
  • Allowances for capital expenditure on fixtures and fittings may also be available

Expenditure Not Allowed

The following are examples of expenditure you cannot deduct when calculating your rental property tax:

  • Capital expenditure incurred on additions, alterations or improvements to the premises unless allowable under an incentive scheme or incurred on fixtures and fittings
  • Pre-letting and post-letting expenses
  • You may not claim a deduction for your own labour
  • The Local Property Tax (LPT) 

Rental Profit or Loss

You may actually make a loss on your property especially if you have a mortgage. This is because the capital portion of a mortgage repayment is not allowed. Also, 25% of the interest repayment is disallowed. So while your property could make a loss you might still receive a tax bill depending on your other sources of taxable income.
Rental losses for tax purposes on property in the state are carried forward and can be offset only against rental income from other property in the state. The rental losses of one spouse or civil partner cannot be offset against the rental income of the other spouse or civil partner. Irish rental losses cannot be set against foreign rental income or vice versa.

The ROS Tax Return

The tax on your rental property is collected under the self assessment system. You will need to register with ROS, the Revenue Online Service. Your tax return is due by October 31st following the year in which you received the rental income, e.g. any tax due on property rental in 2016 is due by October 31st 2017 (This date is extended into November for online filing through ROS). Income tax and USC are payable on rental profit if you are a chargeable person. Also, you will be liable to PRSI of 4%.
If you’re doing your own tax return make sure you follow the guidelines above and, also, Revenue provide a lot of information on their website. If you would like assistance Artisan Accountant can help with with any or all questions you may have regarding rental property tax.