Ten most frequently asked questions about Rental Income
Q. I am renting out my residence. What should I do about tax?
A. If you are getting mortgage interest tax relief at source (MITRS) on your mortgage, get onto the Revenue and cancel it. You cannot claim MITRS when renting out your property. b. Register the letting of your property with the PRTB. This is a legal requirement and very important for tax purposes. c. Make a list of the cost of all furniture and fittings being provided, how much they cost and when you bought them. d. Keep receipts for all expenses incurred in respect of letting out the property e.g.: Letting agents’ fees Service charges PRTB registration fee Repairs Mortgage interest certificate Advertising costs e. After the end of the tax year you have to tell the Revenue about your rental income. You will have to complete a simple Profit and Loss Rental Account and make a claim for the furniture and fittings provided. Our Rental Income calculators and recorders can do all of this for you.
Q. I am renting out my residence and moving abroad. What should I do about tax?
A. If your tenant is paying your rent into a foreign bank then they should be deducting tax at 20% from the rents. Even if they are paying into an Irish bank and the tenant knows you are non-resident they should also take off 20% for tax. The tenant then pays the 20% tax taken out of the rent to the Revenue, who give you a credit for it. You will get a refund of the tax taken by the tenant if you do not owe it to the Revenue. This is why it is very important for non-resident landlords to keep their tax returns to the Irish Revenue up to date.
Q. What do I pay tax on when renting out a property?
A. You pay tax on your rental profit which is calculated by deducting all tax allowable expenses from your gross rent e.g.: Gross Rents for Tax Year: 12,000 Expenses- Mortgage Interest: 8,000 (only 75% allowed for residential property) Insurance: 500 Repairs: 1,000 Total Expenses: 9,500 Rental Profit: 2,500 (This is what you pay your tax on)
Q. When do I pay tax (if I owe any) on rental income?
A. If you are self-employed or rental income is your main source of income then you pay your tax once a year in October. If PAYE is your main income then if the amount of tax owed on your rental income is not large it may be collected through the PAYE system. If not, you will have to pay in October each year under the Self Assessment tax rules.
Q. What is the PRTB?
A. This is the Private Residential Tenancies Board.
Q. Why do I have to register with the PRTB?
A. It is a legal requirement and you must register each letting with them. Also you must register to claim tax relief for mortgage interest against your rental income.
Q. Can I claim tax relief on the PRTB fee?
A. Yes, the registration fee is a tax deduction from your rental income.
Q. What is the NPPR levy?
A. This is the annual levy on second homes and residential rental properties. The levy applies to each separate property.
Q. Why do I have to pay it?
A. It is a legal requirement.
Q. Can I claim tax relief for the payment?
A. Unfortunately not.