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NPPR hits the news as Landlord takes Revenue to Court. And Wins.

NPPR-charge-court-caseWe’re fielding a lot of questions from interested landlords about a recent high court case which has garnered a lot of coverage in the media, regarding the tax treatment of the now abolished NPPR Charge on second properties.

See an example of that coverage here

So what does all this mean to the typical landlord?  Let’s dabble in the detail!

As the years 2009-2012 are over the 4 year limit, landlords will be unable to claim the extra NPPR expenses for these years.

Overview

NPPR (Non Principal Private Residence) is a charge on second and subsequent properties that was in place from 2009-2013 (replaced by household charge, then LPT)
NPPR was not allowable as a deduction for Landlords against their tax bill.
Recent court case taken by a landlord resulted in a ruling that the NPPR should be allowed as a deduction against your tax bill. Revenue are contesting this in the Court of Appeals, so no change in treatment implemented presently.

What’s the Impact?

As the years 2009-2012 are over the 4 year limit, landlords will be unable to claim the extra NPPR expenses for these years.
Recommend that Landlords put on file their wish to claim expense for 2013 before the end of this year, but judgement from court of appeals not expected until 2018.
With the charge at 200e per property, the impact is limited for most landlords, reducing income tax bills by roughly 40e for standard rate tax payers per property and 82e per property for higher rate taxpayers.

The Ruling – in more detail

The NPPR Charge

This charge was an annual charge in respect of residential property that was not the owners only or main residence in the years 2009 to 2013. The Non Principal Private Residence charge was introduced by the Local Governments Act 2009 to go towards funding local authority services.
If you owned residential property on the liability date in any of the years 2009 to 2013, and it was not your only or main residence on that date, you were liable to pay the charge of €200. The first liability date was the 31st of July 2009. For each year from 2010 – 2013, the liability date was the 31st of March.
The NPPR charge was abolished in 2013 and was not payable in 2014 or any future year. However outstanding payments are still being collected by local authorities which are subject to sizeable interest and penalties. If no payment is made, a charge is held against the property and this will have to be settled before a transfer or sale can be completed.

The Court Case

In 2013 a Tax Appeal Commissioner found that landlord Thomas Collins could claim tax relief on the NPPR in relation to six Rental properties where the charge applied. That meant Mr Collins could claim relief on the €1,200 annual NPPR charge he faced.
Revenue appealed this decision. Revenue’s case at its core was that a national charge collected locally was distinct from a local authority rate. This would mean that the NPPR was distinguishable from rates which apply to commercial premises.
However Ms Juctice Reynolds delivered a judgement in the High Court that found that the legislation underpinning the NPPR is designed to ensure that the Revenue allowed collected funds be paid in their entirity to the local authority. Collected funds “are steered in one direction only – locally and away from central government”. Central government is “deliberately bypasses to allow local authorities to be the collectors of the generated proceeds and are empowered to prosecute defaulters”.
Revenue have now appealed this decision to the Court of Appeal. It is not clear how long it will take the Court of Appeal to make a decision on this matter

 

The Refund

The NPPR charge was €200 per relevant property per year for the years 2009 to 2013. If this appeal is overturned it could result in refunds due to thousands of landlords. After it was abolished in 2014 then Minister Phil Holgan stated that some 360,000 properties had been registered with more than €400,000,000 collected. Compliance with the charge had been positive.

 

Example 1

A Non-Resident landlord with one property that paid the 2013 NPPR charge of €200 subject to the lower rate of Income Tax and below the threshold at which they would pay USC.

example 1

Example 2

An Irish resident landlord with one property that paid the 2013 NPPR charge of €200 with PAYE Income of €28,000 subject to the lower rate of Income Tax and subject to the higher rate of USC.

 

example 2

Example 3

An Irish resident landlord with one property that paid the 2013 NPPR charge of €200 with PAYE Income of €50,000 subject to the marginal rate of Income Tax and subject to the higher rate of USC.

example 3

 

The Interest and Penalties

The question on everyone’s mind, will the Interest and penalties applied for late payment be claimable also? As mentioned earlier often substantial interest and penalties were applied to outstanding payments.
Revenue are not answering this question yet but it is highly unlikely. For instance late registration fees paid to the PRTB are not allowable expenses against Rental Income.

 

The Four Year Catch

Many landlords are asking the question, why only claim for 2013 when the charge was paid in the years 2009 to 2012 also. Unfortunately it is a case of statute. Minister Noonan confirmed that there is a “statutory limit of four years from the end of the chargeable period to which the claim relates”
In a recent case the Tax Appeals Commission ruled that refunds due to two taxpayers dating back more than four years cannot be issued even though Revenue confirmed that tax was overpaid by the taxpayers. The commission found that it did not have the power to get Revenue to make the relevant repayments.
The appeals commission stated that the wording of the relevant 2007 tax legislation stated that a claim for repayment shall not be allowed unless it is made within 4 years. The use of the word “shall” does not allow discretion in the application of this directive.

 

If you are a landlord wishing to make Rental Income Returns, contact myself, Breda.  You can find by email at rentalincome@redoak.ie, or phone 05991 29812

Tax Relief for Landlords renting to Social Housing Tenants

Tax Relief for Landlords renting to Social Housing Tenants

From the 1st of January 2016 the government have introduced a 100% interest deduction allowable in respect of Rental property which is let for a period of 3 years to tenants in receipt of certain social housing payments.

The new scheme will allow property owners who rent to tenants in receipt of Rent supplement or the housing assistance payment (HAP) to claim 100% relief on their mortgage interest as an expense against Rental Income. It will also be available to landlords who participate in the rental accommodation scheme(RAS). The new rate compares with 75% relief available up to now.

To qualify, the accommodation must be available to social housing tenants for a minimum of three years and must be registered with the Private Residential Tenancy Board (PRTB). The increased relief will be provided to the landlord retrospectively at the end of the three year period. In some cases it may be necessary for the landlord to apply for certification confirming they have met the terms of the scheme.

Below is an example of the benefit it could provide to Landlords:

Taking an average landlord who has a mortgage of €200,00 at a rate of 5% interest per year under the current guideline:

€200,000                     Mortgage Amount
@ 5%                          Annual Interest Rate
€ 10,000                      Interest Paid per year
€   7,500                      75% of Mortgage Interest allowed as an expense against Rental Income currently

With the new scheme where a landlord does qualify and the landlord receives the benefit it could really affect the landlords tax bill:

€2,500                        Addition Interest allowable
@51%                        Tax Charges-Income Tax 40%, USC 7% & PRSI 4%
€1,250                        The average landlord could expect to save

The new initiative is in place to encourage landlords to let to Social tenants who generally in high demand areas find it impossible to find landlords who will accept rent allowance or HAP.

The entitlement will work on a retrospective basis and therefore below is how it will be awarded:
2016 €10,000 @ 75%
2017 €10,000 @ 75%
2018 €10,000 @ 75%
2019 €10,000 @ 75% + 2016 €10,000 @ 25% + 2017 €10,000 @ 25% + 2018 €10,000 @ 25%

Although the measure was included in the Finance Act and has been in effect since January 1st, the Revenue have just begun implementing it.

 

Breda Lyster,

Rental Income Manager

5 Top Tips for Irish Landlords in 2016

2016 Landlord Rental Income Top Tips

Now that the Summer has finally arrived it’s time to get ahead of the September tax deadline rush.  We asked Breda, our Landlord tax returns expert for some tips to remember in 2016.

Top Tips for Irish Landlords 2016

1. Register for the PRTB

You are required to register each residential tenancy that you have with the Private Residential Tenancies Board. It currently costs €90 for each registration and you should register within one month of the tenancy commencing. This fee is fully deductible from your Rental Income as an expense – but it is especially important if you have a mortgage – Mortgage Interest (more on that later) cannot be claimed as a deduction if your PRTB is not up to date.

2. Cancel TRS on your mortgage if not living in the property

Did you know that once you leave the property it is no longer deemed your principle private residence and therefore you are no longer eligible to claim Tax relief on your mortgage?  This get’s forgotten a lot!

If you do not cancel the TRS and continue to receive this relief after the date of first rental you will be required to repay this amount to Revenue once it is discovered that you no longer reside at the property.

3. Claiming the correct percentage of Mortgage Interest as an expense.

Mortgage interest relief is an allowable expense that can be claimed against your Rental income. You can only claim 75% of your mortgage interest against your Rental Income, a common mistake that many landlords make is claiming 100 % of the mortgage interest paid. It’s so important, we’ll say it twice – you must also be registered with the PRTB to be able to claim it as an expense.

4. Hold receipts for all repairs

Many forget the importance of holding onto receipts when purchasing items for their Rental property. It may sound simple but a shoebox in the corner can save a lot of hassle in the long run. Most expenses are allowable and reduce your overall Rental Income profit. Don’t spend time worrying if it is eligible or not – let us check them for you!

Revenue can ask to see a copy of your receipts at any time and if you cannot provide them then they will amend your Rental Income return and this will lead to a liability owing to Revenue.

5. Accountancy Fees

When completing your Rental Income return we would advise that you get an expert to complete the return for you to ensure that your Rental Income return is prepared and submitted to Revenue correctly. This will also result in accurate filing and no scary surprises when Revenue do a review of your return and discover incorrect calculations which could lead to a hefty tax bill. This is also deemed a tax deductible item and is fully claimable against your Rental income.

Breda Lyster,

Rental Income Client Manager

 

Tax Return Deadline is Approaching

Tax Return Deadline

Well, the kids are back at school and the evenings are closing in, which can only mean one thing….the tax deadline is approaching!

The deadline for lodging your 2014 Rental Income Tax Return and paying your 2014 tax liability is 31st October 2015. This means there’s just 8 weeks to get your paperwork sorted. Therefore, in order to allow us to review and prepare your Tax Return, you’ll need to have your completed application form and supporting documents into us by 18th September.

We take the hassle out of sorting through your receipts and preparing your tax return – all you have to do is provide the details on our application form and we sort out the rest.

Contact us today for your obligation free quotation.

Tax Issues for Airbnb Hosts

Tax Issues for Airbnb Hosts

With the increasing popularity of Airbnb in Ireland, many homeowners have been enjoying a little extra tax-free spending money by becoming Airbnb hosts and renting out a room or entire property to tourists or holiday makers.

Assuming the income would fall under the Rent-a-Room Relief scheme, many Airbnb hosts were not declaring this as taxable income. However, Revenue were quick to clarify the situation after seeing the potential loop hole, and unfortunately they did not view the additional income in quite the same light.

So, we thought we’d help shed a bit of light on the issue of taxes for Airbnb hosts in Ireland.

Income from Airbnb rentals is taxable

Income received from renting out a room in your house or the entire property on a short-term basis is taxable. Previously, it was assumed that renting out a room on Airbnb would qualify for the €12,000 tax free threshold under the Rent-a-Room Relief scheme. However amendments to the scheme guidelines now state that short-term lettings are not eligible if they are provided through online accommodation booking sites.

Therefore, you need to declare this additional income to Revenue for taxation purposes. Income from Airbnb rentals is deemed to be trading income and not rental income.

Claim expenses to help reduce your tax bill

It’s not all bad news however! Given that Revenue considers income from your Airbnb rentals as ‘trading income’, it is only reasonable that allowable trading expenses should qualify as deductions. These are expenses like the cost of providing meals, light, heat or laundering costs – as well as repairs and maintenance to guest accommodation areas.

Therefore, it is imperative to keep your receipts for these items so they can be offset against your income to reduce your overall tax bill.

How to declare this income

If you’re a PAYE worker, to declare your additional income to Revenue you need to complete a tax return. This is done via a Form 11 or Form 12, depending on the amount of additional income you have. Where the profit from your additional income is less than €3,174, then you need to complete a Form 12. However, if your profit is €3,174 or more, you need to complete a Self-Assessment return, via a Form 11. Your return needs to be completed by 31st October the following year.

If you are self-employed, you need to declare this as part of your trading income on your annual tax return, via a Form 11.

Thinking of selling? You could get stung for Capital Gains Tax

Unfortunately it doesn’t stop at just taxing your income. Down the line if you decide to sell your property, you could be liable to Capital Gains Tax (CGT) as the property has been used for business purposes.

Normally, the gains from the sale of a principal private residence are exempt from CGT. However, Revenue have said that if all or part of the property has been used for business purposes, including short-term rental accommodation prior to a sale, then a capital gains tax liability would arise on the portion of the property that was used for business purposes. From 2012 onwards, a CGT rate of 33% applies – ouch!

It pays to get your taxes right

Revenue have said that since 2013 it has had access to data from financial institutions related to credit and debit card transactions, which mean it can identify online traders in this area. Therefore, there is no use burying your head in the sand, as it is quite likely that Revenue will be undertaking spot checks in this area and you could be penalised if you have declared this additional income.

For more information, visit Revenue’s website.

Written by Breda Lyster

Breda LysterI’m the expert when it comes to all things Rent at Red Oak. I’ve been working with our Rental Income clients for the past 3 years, so have seen just about everything – from shoeboxes of receipts to ‘the dog ate my homework’ style excuses. It doesn’t matter what state your rental records are in, I’ll get them sorted for you.

Claiming the Cost of Renovations

Home Renovation Incentive for Landlords

Have you been wanting to give your rental property a bit of a makeover, upgrade the bathroom or even a little landscaping?

Many landlords haven’t invested in renovations in their investment properties in recent years – mainly due to an inability to recoup the costs through rental income. We know it’s difficult enough to make a profit as an Irish landlord, but there is a scheme available to help reduce the cost of your improvement works.

What is the Home Renovation Incentive Scheme?

In October 2013, the Government launched the Home Renovation Incentive (HRI) Scheme for homeowners and later extended the Scheme to landlords in October 2014 in a bid to boost the building trade. The HRI gives tax relief on the VAT portion (13.5%) of a bill for repair, renovation or improvement works carried out by an authorised contractor. At this stage, the Scheme will run until 31st December 2015.

How It Works

The HRI Scheme provides tax relief by way of a tax credit to homeowners and landlords who undertake to repair, improve or renovate home or rental properties. The credit is 13.5% of your qualifying expenditure. Qualifying expenditure is the amount you pay a contractor before VAT so you are effectively getting relief on the VAT paid by you to the contractor.

Qualifying Expenditure includes activities like:

  • Painting and decorating,
  • Tiling, plastering,
  • Plumbing,
  • Window replacement,
  • Bathroom upgrades,
  • Supply and fitting of kitchens,
  • Attic conversions,
  • Garages,
  • Rewiring, extensions,
  • Landscaping,
  • Driveways,
  • Septic tank repair or replacement.

Of course, this list is not exhaustive, so if you are unsure you can contact your local tax office before works commence and they will advise you if the project is eligible or not.

How Much Can I Claim?

The maximum tax credit available is €4,050 (€30,000 at 13.5%). The relief is claimed back over 2 years following the year in which the work was carried out. So for example, for work carried out in 2015, you will receive the HRI tax credit during 2016 and 2017.

It is important to note that you won’t get a refund from Revenue but it will increase your tax credits. So, as with other tax credits, you must have earned enough and paid tax in order to benefit. If you haven’t paid enough tax to cover the amount of the relief you can carry the credit forward to future years when you may be able to utilise it. Finally, the tax credit applies only to income tax paid, not to USC or PRSI.

The Small Print

There are a few conditions that you need to be aware of when looking to apply for the Scheme.

  • Minimum Spend: There is a minimum spend of €4,405 before VAT in one year (€5,000 including VAT). However, you don’t have to spend the total €5,000 with the same contractor. Over the course of a year you can use a different tradesmen. As long as each is a qualifying contractor and you spend a total of €5,000 within the year, this qualifies for tax relief.
  • Tax Compliance is vital: you and your contractor need to be tax compliant. That means a Tax Clearance certificate for your contractor and up-to-date tax returns, Local Property Tax, Household Charge and PRTB payments for you
  • Exclusions: You cannot claim this credit on new builds or complete reconstruction of an uninhabitable house.
  • Insurance Claims: If you are making an insurance claim please note that the qualifying expenditure is reduced by the amount of your claim received.
  • Grants: Where grants are received, your qualifying expenditure is reduced by three times the amount of the grant.
  • Apply Online: You must use the HRI online system to apply for the Scheme or you won’t be eligible. See details below

How to Apply

To apply, you need the cooperation of your contractor/s – but it basically involves 4 steps

Step 1 – Get a Quote/Invoice with the Contractors’ VAT number

Step 2 – Request your contractor/s to enter the works on the HRI Online System and check that they are entered before the works commence (or at least before you make the first payment).

Step 3 – Make sure our contractor/s enter each payment made. It’s not good enough just to keep copies of the receipts.

Step 4 – Once the works are complete and all payments have been entered by the contractor/s, you need to log into the HRI Online system to claim the tax credits. This means you will have to submit your claim via the HRI Online System after 1st January in the year following the works for the tax credits to be applied by Revenue.

 

Breda LysterWritten by Breda Lyster

I’m the expert when it comes to all things Rent at Red Oak. I’ve been working with our Rental Income clients for the past 3 years, so have seen just about everything – from shoeboxes of receipts to ‘the dog ate my homework’ style excuses. It doesn’t matter what state your rental records are in, I’ll get them sorted for you.

Government proposals on Water Charges could impact Landlords

Water Charges Impact on Landlords

Landlords could now be considered debt collectors for Irish Water if planned proposals go ahead regarding the collection of unpaid water charges.

Last night, Cabinet approved proposals to deduct outstanding water charges from the wages or social welfare payments of non-payers. But, this also included a proposal obliging landlords to withhold deposits from renters, until proof of payment to Irish Water is provided.

Understandably, the head of the Residential Landlords Association, Fintan McNamara, has spoken out against the move, labelling it an “outrageous imposition” to put on landlords. He went on to say that realistically the deposit would have to change to a three month deposit – rather than one month – in order to make allowances for items like rent arrears.

The government, however, has stressed this is a “temporary role for landlords” until the PRTB takes over deposit protection.

As well as the deposit measure, TheJournal.ie reported this also means:

  • The liability of the water charges will transfer automatically to an owner of a property if the owner has not provided Irish Water with the necessary details for a tenant.
  • There will be an obligation in all new tenancy agreements for the person who lives there to pay water charges, other than short-term lets where the landlord can retain this liability.
  • There will be an obligation to confirm that water charges are paid before the completion of the sale of a property to include a requirement to discharge arrears of water charges.

Post Written by Nerilie Watson

Nerilie WatsonI’m the Marketing Manager at Red Oak and although I’m no tax expert, I LOVE getting money back from taxman. My job is to translate all the complicated and confusing ‘tax speak’ that is bandied about our office into something that is understandable for all us ‘average Joe soaps’.

Tax Obligations of the Non-Resident Landlord

Tax Obligations of Non Resident Landlords

So, you’ve flown the coup and headed to greener pastures (or just warmer ones!) in search of work. But, you own a house back home and are renting it out to help cover your mortgage payments while you’re gone. Sound familiar?

A lot of people are in this situation, but are unaware of how this impacts them from a tax perspective. There’s a common belief that once you leave the country, you no longer have any tax obligations back in Ireland. For many people, this is true – however, if you have any source of income continuing from Ireland, be it through interest, dividends, pension or rental income, then you are required to declare that income for tax purposes.

Taxes on your Rental Income

In the case of rental income, landlords who live outside of Ireland – known as non-resident landlords – your tax obligations can be dealt with in one of two ways:

1. Tenants Withholding Tax

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 detailing how much tax was withheld. This withholding tax will be held on account for you and can be claimed as a credit upon filing your Income Tax Return.

2. Appoint a Collection Agent

A Collection Agent is someone who assumes the responsibility of submitting your tax returns and paying your tax liability on your rental properties. The Collection Agent will make an annual tax return and account to Revenue on your behalf for any tax due under the self-assessment rules. The agent appointed does not need to be a professional person – rather, they can be a family member or other trusted person who is prepared to do so.

Don’t do any of the above?

Don’t fret! We can help!

Here at Rental Income with Red Oak, we provide Rental Income tax return services for both resident and non-resident landlords. In our experience, a number of clients have highlighted their concerns about both options above with us – be it for cashflow purposes or the fact that they don’t want to burden family members or friends with the responsibility of filing a tax return and paying any tax liability on their behalf.

As one of Ireland’s most prominent tax agents, we recognised this concern and approached the Revenue Planning Department. We suggested to Revenue that if there was no Collection Agent set up and the tenants had not been withholding tax on rents paid, we can proceed to register a non-resident landlord for Income Tax and prepare a return for our client’s rental income. Revenue agreed to this solution and granted us a special dispensation for our clients who fall under this criteria.

Other Taxes

Unfortunately, the taxes don’t stop there – there are a number of other house-related taxes that are the landlord’s responsibility. These include:

  • Local Property Tax (LPT): The LPT came into effect in 2013 and applies to all properties regardless of whether the owner is resident in Ireland or not. For more details on the LPT, visit Revenue’s website.
  • Non-Principal Private Resident levy (NPPR): The NPPR charge is an annual charge of €200 in respect of all residential property not used as the owner’s sole or main residence, or in other words a property tax on second homes in Ireland. The chargeonly applies to properties situated in Ireland and ceased for all rental properties from June 2013. For more details, visit our NPPR FAQ page
  • Household Charge: The household charge was a local authority levy applied to all residential properties in Ireland which only existed for 2012; it was replaced by the LPT from 2013 onwards.  The levy was €100 per dwelling.

Who Pays Water Charges?

The deadline has passed for registering properties with Irish Water for the incoming water charges. As a landlord, you are required to notify Irish Water of your tenant’s details otherwise you may be liable for the charges for any property you own. Irish Water will then engage directly with your tenant’s to establish an account and issue the relevant bills.

Getting Help

For many non-resident landlords, keeping on top of all your tax obligations is a nightmare. Rental Income with Red Oak offer a friendly and expert service to take the hassle out of filing your tax returns and ensure your Income Tax obligations are met.

Contact us today for your obligation free quotation.

Breda LysterWritten by Breda Lyster

I’m the expert when it comes to all things Rent at Red Oak. I’ve been working with our Rental Income clients for the past 3 years, so have seen just about everything – from shoeboxes of receipts to ‘the dog ate my homework’ style excuses. It doesn’t matter what state your rental records are in, I’ll get them sorted for you.

 

 

A Simple Guide to Being a Landlord

A Guide to Being a Landlord

Many landlords are reluctant landlords these days, so it can be a little overwhelming working out what you need to do to get set up as a landlord in the first place. It’s not as easy as just handing over the keys and receiving rent back. So, here’s a simple guide to being a landlord in Ireland.

Letting Agent or Go It Alone?

One of the first decisions to make when renting a property is whether to manage the property yourself or to engage a letting agent or management company. To help you decide, there’s a few questions you should ask yourself:

  • Do you have time to respond to enquiries and show possible tenants through the property?
  • Do you have time to deal with tenant problems?
  • Do you have the time and know how to carry out maintenance on your property?

In the end, the decision will depend on your individual circumstances.

Review the market

You need to decide how much rent you will charge – which will ultimately depend on the location and quality of your property and similar properties available to rent in your area.

Be realistic! You need to factor in times when the property is empty in the financial projections, as well as all the other costs associated with having a rental property.

Get your property rental ready

There’s a few things to get sorted before you start looking for tenants. Firstly, you need to ensure that property meets certain minimum standards – this includes things like the property is free from damp, in good structural repair, has hot and cold water, adequate means of heating and ventilation, appliances are in good working order and electrical wiring, gas, pipes are in good repair. You also need to have a Building Energy Rating, or BER, Certificate.

Spread the word

There’s loads of different ways to get the word out that your property is available to rent – and they’re not expensive! One of the most popular ways is to list your property on www.daft.ie which costs approx. €20. You can also place an advertisement in your local or national newspaper or if you are near a College or University, even posting an advertisement on student noticeboards can attract potential tenants.

Know your rights

It’s important to know your rights when becoming a landlord. The Residential Tenancies Act 2004 outlines your rights as a landlord, which include:

  • Setting the rent, once a year according to the current market
  • Receiving the rent from the tenant on the date it is due
  • End the tenancy without reason within the first six months of the lease agreement. However, special care should be taken when dealing with fixed term tenancies as a reason will always have to be given
  • Be informed of who is living in the property
  • Decide whether to allow sub-letting by the tenant
  • Be informed of any repairs needed and be granted reasonable access to fix them
  • Refer disputes to the Private Residential Tenancies Board (PRTB) once the tenancy is registered

Know your obligations

Likewise, there are certain obligations you need to fulfil in order to execute your role as a landlord in accordance with the law. These include:

  • Register the tenancy agreement with the Private Residential Tenancies Board. This only costs €90 and means you will be able to avail of the PRTB’s dispute resolutions service. Plus, if you don’t, you may be prosecuted.
  • Provide your tenant with a rent book (if no written lease is in place) and receipts of payment
  • Make sure that your property is in good condition
  • Pay any charges related to the property e.g. taxes and duties
  • Maintain the property to the standard it was at the start of the tenancy
  • Reimburse the tenants for any repairs carried out on the structure
  • Insure the property
  • Provide your tenant with information and contact details of any agent who deals on your behalf.
  • Cancel your Tax Relief at Source (TRS), if you have a mortgage and were claiming this
  • Submit a Rental Income Tax Return before the 31st October of the following year

Manage your finances

As you have rental income, you will now be required to complete a tax return. Rental income is liable to income tax but you are allowed to offset certain expenses, such as

  • Mortgage Interest
  • Accountancy Fees
  • Insurance
  • Repairs

Things like opening a separate bank account for your rental income and expenses and keeping accurate records (and your receipts!) for all your rental expenses will help make your life a whole lot easier when it comes to tax time.

Don’t be afraid to ask for help!

Knowing what expenses you can and can’t claim is not an exact science and the last thing you want to do, is submit an incorrect tax return. Our team are experts in managing your rental income tax return and will offer you a personalised service, so you know the job has been done right!

Contact us today for your obligation free quotation.

Breda LysterWritten by Breda Lyster

I’m the expert when it comes to all things Rent at Red Oak. I’ve been working with our Rental Income clients for the past 3 years, so have seen just about everything – from shoeboxes of receipts to ‘the dog ate my homework’ style excuses. It doesn’t matter what state your rental records are in, I’ll get them sorted for you.

Mortgage Interest Expensed against Rental Income

Budget 2012 Mortgage InterestPossible changes to Mortgage Interest Allowed.

For most people, Mortgage Interest is the largest expense item you can claim against your rental income in Ireland.  While it used to be allowable 100% against your rental income, since 2009 you can only claim 75% of your mortgage interest in reducing your tax bill.  This change resulted in many people having a profit on a their rental properties, where previously they had a loss.

TASC Recommends further Reduction

One of the recommendation from TASC, an independent economic agency, for Budget 2012 was to further reduce the amount of Mortgage interest allowed from 75% to 40%.

Will it Happen?

Certain areas are seen as easy targets in Budgets and landlords / rental income certainly fit the bill in this.  But as it is already proposed in Budget 2012 to introduce PRSI on rental income, putting two charges on landlords in the same Budget may prove to be a touch too far.  We’re hoping this TASC proposal is kicked to touch in this Budget.

If this was introduced in the Budget, the cost to a landlord who pays tax at the higher rate would be approximately €182 per €1,000 of previously allowable mortgage interest.

Budget 2012

Keep up to date with how Budget 2012 with affect Landlords and your Irish rental income tax returns on our blog here or for non rental income changes, check out our Budget Calculator which we will update on the evening of the 6th December.