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Main Street, Virginia, Co. Cavan. Phone 049 8549966
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Thomas McGibney & Company | |||
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Main Street, Virginia, Co. Cavan. Phone 049 8549966 |
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.Tax on Rental Income- A Guide
How
is Rental income Taxed?
Rental Income is taxable under the Irish tax system. For most cases of rental income, the amount taxable can be calculated as follows: Gross Rental Income less Allowable Expenses less Capital Allowances equals Taxable Rental Income. Allowable
Expenses
The following are examples of the type of expenses that may be claimed for:
It is not generally possible to claim for the following expenses:
Capital AllowancesAn allowance for Wear and Tear of furniture and fittings can be claimed in respect of all furnished properties. This normally will cover such items as carpets, electrical appliances, central heating, furniture, etc
From 1 January 2001 the allowance is 20% per year, each year for 5 years.
Prior to this, the allowance was 15% per year for the first 6 years and 10% in the year 7.
An itemised list of capital expenditure should be attached to each year's tax return so that the allowance can be calculated.
Additional Capital Allowances are also available in relation to certain Capital Expenditure on qualifying properties under the various incentive schemes (Urban Renewal, Rural Renewal etc.) Example
Rent Account
The following is a typical example of a Rental Income Computation € Gross rent 9,000 Less Allowable Expenses € Letting Agent Fees 1,200 Allowable Interest 3,500 Repairs 1,100 Electricity/Heating 500 Accountancy Fees 250 Cleaning
costs
400
6,950 Rental Income 2,050 Wear
and Tear Allowance Furniture & Fittings Cost
6,000 x 20%
1,200 Taxable rental income 850
Rental
Losses
If total allowable expenses exceed the rents received, the landlord incurs a rental loss for a particular tax year. These losses may only be offset against other rental income. It is not possible to offset such losses against other non-rental income sources (e.g. PAYE, business profits etc). Unused losses can be carried forward for offset against future rental profits. Self-Assessment
Tax Collection
Generally, tax due on rental income is collected under the Self Assessment system. If in doubt, please refer to our Guide to Self-Assessment. Rent a Room ReliefThe 2001 Finance Act introduced a valuable tax relief for individuals who rent a room (or rooms) in their own home. Income from such “Rent a Room” arrangements is exempt from tax, provided the gross rent received does not exceed €7,620 (IR£6,000) in a calendar tax year.
For the short tax year 2001 (5/4/01-31/12/01) the limit is €5,587 or £4,400.
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