TAXES ON RENTAL INCOME

IN IRELAND

Irish tax recognizes that when you rent your property, even if you do so only part time, you must spend money for things like mortgage interest, repairs, rental platform fees, maintenance, and many other expenses. The law allows you to subtract these expenses, plus an amount for the depreciation of your property, from your effective gross rental income (all the money actually earned from renting the property). You use that to determine your taxable income which is the amount, if any, that you pay tax on.

Repairs and maintenance are the costs you incur to keep your property up and running. They are deductible in the year in which you incur them. Repair expenses are among the most valuable deductions tax payer can claim.

Long-term assets are things you use for your rental activity that have a useful life of more than 1 year. Your main long-term asset is your home or building you rent out. However, long-term assets also include such things as furniture, appliances, vehicles, and equipment. These costs, called capital expenses by accountants, are considered to be part of your investment in your rental activity, not day-to-day operating expenses. The general rule is that the cost of long-term assets must be deducted a little at a time over several years—a process called depreciation. In Ireland rate of Capital Allowances ( tax term for Depreciation) is 12.5% which can be claimed every year rather once write off as an expense.

Revenue allows to claim Mortgage Interest Relief against rental income. The interest must be from a mortgage that is used to purchase, improve or repair your rental property.

If you require assistance, you can hire a formation agent in Ireland, such as TAS Consulting, to handle the paperwork and guide you through the process.

If you’d like to talk to us, call us on +353 (0)1 442 8230, 00353 851477625 or email moh@tasconsulting.ie