Irish rental income and tax- your go to guide!
If you earn rental income in Ireland, you will have to pay tax on this income!
You may be confused about how much tax you should pay, how to pay it, when to pay it and if you’re entitled to any tax reliefs!
Lucky for you, we are here to answer your questions about Ireland’s rental tax system!
This guide includes your most frequently asked questions in relation to the basics of rental income and taxes, rental expenses, the rent-a-room relief initiative and more!
The basics of rental taxes in Ireland
What is considered “rental income”?
Rental income includes:
- Rent from a house, apartment, office, flat or farmland
- Payments you receive for:
- Allowing advertising signs or communication transmitters to be put up on your property
- Allowing a right of way through your property
- Allowing sporting rights on your property for example, fishing or shooting rights
- The cost of work to your rental property
- Certain lease premiums, as well as deemed and reverse premium’s
- Conacre lettings
- Service charges for services connected to the occupation of the property
- Any payments from an insurance policy covering non-payment of rent
What tax will I pay on rental income?
You will generally pay either 20% or 40% on your rental income. This will depend on your personal circumstances like marital status, the amount of rent you earn and whether you have other sources of income etc.
How much rental income can I earn before I have to pay tax?
This depends on whether you:
- Rent out a room in your home on a short or temporary basis
- Rent out a room in your own home on a long term basis
- Rent out an entire property
What if I rent out a room in my home on a temporary or short-term basis?
If this applies to you, you will not be able to avail of rent a room relief.
If you earn more than €5,000 in rental income each year, you must register for income tax and file a Form 11 tax return each year.
If your rental income amounts to less than €5,000 each year, you must file a Form 12 each year.
What if I rent out a room in my home on a long-term basis?
If you rent out a room in your home over a long period and you earn less than €14,000 from rental income in a year, you can avail of rent a room relief.
If you earn more than €14,000 in rental income in a particular tax year you will have to pay income tax and file a Form 11 tax return.
What if I rent out an entire property?
If you rent out an entire property and expect to make a profit of over €5,000 in rental income per year you will be considered a “chargeable person” by Revenue.
You must complete a TR1 form to register for income tax from the date the property is first put on the rental market.
At the end of the tax year, you must then file a tax return by filing a form 11.
If you earn less than €5,000 per year in profits, you will not be considered a “chargeable person”. Therefore, you won’t have to register for income tax.
However, you must still pay tax on this income and file a tax return using a form 12 at the end of the tax year.
You must file a tax return every year, regardless of whether you think you have a tax liability or not.
What is the deadline for filing my rental income tax return?
You must file your tax return by 31 October each tax year.
Taxback.com can do this on your behalf, ensuring you are fully tax compliant!
We have a dedicated tax return service for landlords
Rent-a-room relief
What is rent-a-room relief?
This is an initiative whereby a homeowner can earn rental income up to a certain amount without paying tax on it.
To be eligible for this relief:
- Your rental income must be less €14,000 in a tax year
- Your home must be located in Ireland
- A self-contained unit, like a basement flat or a converted garage attached to your home can also qualify
- You must occupy it as your main residence during the year of assessment
You are not eligible for this relief if:
- You’re renting the room in your home to your child/children
- You’re an employee in a company and the company pays you to allow clients to use the room on an occasional basis
- You rent the room to short-term guests
It’s important to note that if you rent out a room to students for the academic year and then rent it to holidaymakers for short breaks during the summer, you must separate income from the summer months from the income eligible for relief.
Is my Airbnb income covered under rent-a-room relief?
No, as Airbnb income is earned from short-term accommodation, it is not covered under rent-a-room relief.
Do I need to be the owner of the property that I rent out to avail of rent a room relief?
No it’s not necessary to own the property. Your landlord may allow you to sublet a room to someone else and you can still avail of this relief!
How can I avail of rent-a-room relief?
When you file your tax return every year, you should detail your income that is eligible for the relief in the “exempt income” section of your tax return.
When you file with Taxback.com we will ensure you avail of every possible relief you are entitled to!
Can I claim back for both rent-a-room relief and rental expenses?
Unfortunately, you can’t deduct expenses from your rental income while claiming rent-a-room relief.
It may happen that you will be better off opting out of rent-a-room relief in some years to offset your expenses against your rental income and avail of wear and tear allowances.
You can do this by notifying Revenue in writing, on or before the tax return deadline.
I want to rent to a family member. Will I have to pay tax on this?
Yes, if you rent to a family member you will have to pay tax on this rental income.
If you rent a room in your home to your one of your children, you cannot avail of the rent-a-room relief.
If you provide accommodation to a child outside of the family home rent-free, this will be considered a gift and it may be subject to tax.
A parent can give a child an annual tax-free gift to a value of €3,000. A child can receive a maximum of €6,000 each year.
You do not have to pay tax on accommodation that is provided to a child under 18 years old or under 25 years old and in third level education
We have a dedicated tax return service for landlords
Rental expenses
Can I claim a tax deduction for rental expenses?
There are a number of items which can be deducted from your rental income which will reduce the amount of tax you pay.
How do I claim rental expenses?
When you file your annual tax return you should declare your rental expenses on your return. You should file a Form 11 or 12 depending on your circumstances, for example if you earn over €5,000 in non-PAYE income you should file a form 11.
It is vital to be organized and keep all of your important receipts and documents relating to your rental expenses in a safe place!
We have a dedicated tax return service for landlords
What rental expenses can I claim to reduce my tax bill?
Rental expenses include:
- Repairs and Maintenance
These expenses include the cost of fixing broken locks or windows, servicing boilers etc. Repair and Maintenance must be essential and you must not profit from it.
2. Wear and Tear
Wear and Tear is taken as a deduction from your taxable income and accounts for the cost of furnishings and fittings if you furnish your property before tenants move in.
Wear and Tear expenses include all spending on furnishings but you must keep your receipts for proof of purchase.
3. PRTB Registration
You can claim back the full initial fee you pay when you register and the sum that you pay per tenant. If you register late you will face penalties and may not be able to claim back this expense.
4. Management/Agent fees
You can claim back tax on any expenses you pay to an intermediary who collects rent from tenants and communicates with them on your behalf.
5. Local Service Charges
If you pay for the collection of recycling, rubbish or pay for any services that are provided to your property by the local council you can claim for these expenses, only if you pay for them yourself.
6. Advertising Expenses and Estate Agent fees
You can claim back tax on any expense you pay for publicising the property you want to let.
7. Insurance Premiums
If you pay any insurance premiums in relation to your rental property, you can claim a tax deduction on these expenses- including premiums on Mortgage Protection Policies
8. Legal/Accounting Fees
You can claim back on any expenses for any legal or accounting services you avail of in relation to your property.
Are there any costs that I cannot claim as a rental expense?
There are a number of costs that you cannot claim as rental expenses including:
- Local Property Tax
- Your labour- if you carry out labour or repairs to your property, these costs cannot be deducted
- Stamp Duty (any costs for any legal advice or assistance you receive in relation to stamp duty are deductible)
- Interest
- Pre/Post-letting-expenses (any repairs or maintenance carried out when the property is not being let are not tax deductible)
Airbnb and rental taxes
Do I have to pay tax on my Airbnb income?
Yes, you will have to pay income tax if you earn income from renting out your home or a room in your home through a platform like Airbnb.
The good news is that you can deduct a number of expenses from this income which can reduce your tax bill.
How much tax will I have to pay on my Airbnb income?
The tax you pay on your Airbnb income will depend on your personal circumstances. You will be subject to tax at either 20% or 40%.
The type of tax you pay will depend on the frequency of bookings for your property. Your income will be deemed either Case I “trading” income or Case IV “miscellaneous” income.
Your income will be considered Case I if:
- You rent the property out on six or more occasions each year
- Your property is occupied for 30 or more nights each year
- Your income from Airbnb is greater than €5,000 each year
- Your property is available for tenants/guests all of the time
If your income is considered Case I “trading income” you should register with Revenue using a TR 1 form. You should also file a Form 11 tax return every year
If your income is below €5,000 each year you should complete your annual tax return using a Form 12.
Can I claim any tax deductions on my Airbnb income?
Yes, there are many tax deductions that you can claim on your Airbnb income.
These expenses must have been ‘wholly’ and ‘exclusively’ incurred from the running of your Airbnb accommodation.
If only a part of the expense is associated with your Airbnb trade, then you can only claim for the appropriate amount.
Below is a list of allowable expenses for your Airbnb income.
Repairs and Maintenance
This includes servicing boilers, replacements of windows and locks, laundry costs, supplying new furnishings and fittings, purchasing cleaning supplies.
Agent fees
This includes any agent’s fees incurred as well as the service fees that Airbnb charges its hosts
Utilities
This includes gas, electricity, TV and the internet.
Local Service Charges
This includes rubbish collection and recycling, however, it is important to note that if you pass these expenses onto your guests/tenants you will not be able to claim them.
Other allowable expenses include:
- Advertising costs
- Legal and Accounting Fees
- Insurance costs
- Mortgage Interest
We have a dedicated tax return service for landlords
I have more questions about rental income and taxes, who can I talk to?
If you have more questions, Taxback.com can help!
We have a team of Tax Advisors who are on hand and happy to answer your queries!
You can reach out to talk to our tax agents in our Live Chat office today!
As a landlord earning rental income in Ireland, you must file a self-assessed tax return!
Taxback.com can offer a landlord tax return service where we will take care of your tax return, saving you time and hassle!
Why choose Taxback.com?
- Your own dedicated account manager
- We ensure you are fully tax compliant
- We minimize your tax bill by claiming every relief you are entitled to
- We offer a no-obligations quote for the service
