Landlords should be aware of the following tax implications on Rental Property in order to stay tax compliant.

1.When is a tax return required?

Irish rented property A tax return is required when a person rents out their property regardless of the fact that they are not generating a profit. Certain expenditure incurred by the landlord can be claimed to increase their loss. Also, all losses once declared, are available to be carried forward and offset against rental profits generated in future years.

Overseas properties If you are an Irish resident you are subject to Irish taxes. The same implications apply, as set out above. However losses cannot be offset against Irish rental income.

2.Main Deduction – Mortgage repayments

It is important to stress that only the interest you are repaying on your mortgage is allowed as a deduction and for residential property this is now limited to 75% of interest. You cannot claim relief on any of the capital repayments you make against your mortgage.

Also, if you are not registered with the Private Residential Tenancies Board (‘PRTB’) you will not be allowed to claim a deduction for mortgage interest.

3.Principal Private Residence – Moving out and renting

If you decide to rent out your principal private residence, the rental income (less any tax deductible expenses such as mortgage interest) is taxable and would also need to be declared on your tax return.

4.Property owner living outside Ireland

If a property owner resides outside the Republic of Ireland and they rent their principal private resident or any other investment property, they are required to do either of the following:
i) The tenant must deduct 20% of the rent due, then remit this amount to Revenue and also complete a Form R185 at the end of the year for the landlord; or

ii) Appoint a Collection Agent – a person who is prepared to take on the responsibility and who undertakes to make annual tax returns and account to Revenue on behalf of the landlord.

In Summary

In order to review your property portfolio and to ensure you are tax compliant, contact Elma in today. Her advice could save money and will ensure that all your tax affairs are correct.