If you own a rental property in Ireland and are therefore receiving rental income, you are legally obliged to file an annual self-assessed tax return with Revenue.
At MLMG, we offer a specialised tax return service for both resident and non-resident landlords. We have extensive experience in working on a cross-border basis.
What taxes are landlords liable for?
Landlords are liable for the following taxes:
· Income tax on rental income (incluidng PRSI and USC)
· Stamp duty on property purchase
· Capital gains tax on disposal
Can I offset any expenses?
Yes, certain expenses are allowable against rental income when calculating your tax liability.
Certain expenses incurred may be used to reduce the income tax liability on rental income, these include;
· Qualifying mortgage interest (currently 75% for residential property* and 100% for commercial property)
· Management fees
· Advertising expenses
· Estate agent fees
· Insurance premiums
· Legal fees for drawing up leases
· PRTB registration fee
· Mortgage protection policy premium
· Accountants fees for preparing rental accounts
· Refuse and other service charges – if paid by the landlord
· Cost of repairs and maintenance – this covers repairs and general maintenance of a property, however it is not possible to claim for your own time, for example, cutting the grass
· Wear and Tear (see capital allowances)
*Important: Properties must be registered with the Private Residential Tenancies Board in order to claim mortgage interest as an expense! For more information visit PRTB
Relief against income tax is allowed on items that are purchased to furnish the property. The current allowance is 12.5% of the cost over 8 years (effective since Dec 2002) For example, if you purchase a suite of furniture for €1,000 a capital allowance of €125 per year can be off-set against the rental income for tax purposes for the next 8 years.
Tax on rental income – how is it paid?
Profit on rent is taxed on a calendar year basis. Individuals taxed under the PAYE system who have rental profits must make a tax return under the Self Assessment system. Here, at MLMG, we can advise on and complete this tax return for you.
When must the tax return be made?
The return must be made by October 31st of the following year. For example a tax return for rent received in 2016 must be made by 31st October 2017.
What records must be kept for tax purposes?
You must keep full and accurate records of your lettings from the start. You need to do this whether you send in a simple summary of your profit/ loss, prepare the accounts yourself or have an accountant like MLMG do it for you. All supporting records such as invoices, bank statements, cheque stubs, receipts etc should be retained. You must keep your records for six years unless your revenue office advises you otherwise.
Capital Gains Tax
If you decide to sell your rental property, you will need to complete a Capital Gains Tax return. Capital Gains Tax (CGT) is chargeable on gains arising on the disposal of assets – currently (April 2017) this stands at 33%.
If you have a rental property and need to file a tax return, please contact us today for expert advice on 07493 21420
To read more about rental income and how it is taxed, check out The Revenue.
For more information on Capital Gains tax on disposal of a property, contact us today or call us on 07493 21420