Article
New rules for landlords who are living abroad
Are you a landlord living abroad? New rules set to come into place from 01 July 2023.
This week Revenue have released details of changes they are making in relation to how non-resident landlords receive rents.
Please note these changes are due to take effect quite quickly from 1 July 2023, when use of a new online system called NLWT becomes operational.
Existing System for non-resident Landlords
Until now, non-resident landlords were supposed to follow 1 of 2 options:
- Appoint a collection agent in Ireland to collect rents on your behalf, with no deduction or withholding of tax.
- Your tenant directly deducts 20% of your monthly rent and gives it to Revenue.
Revenue offered some level of flexibility around the above, so long as tax returns were being filed, and the correct tax was being paid.
We are now advised that Revenue flexibility is withdrawn from 01 July 2023, and strict implementation of the above will be required.
New Non-Resident Landlord Withholding Tax (NLWT) System
The new NLWT system will enable tenants or collection agents to make Rental Notifications (RN) when making payments to a non-resident landlord. This notification and accompanying payment, needs to be submitted within 21 days of paying the rent to the non-resident landlord.
The system is available to the tax agent, the collection agent, the landlord and the tenant. Landlords will be able to claim any withheld credits on their annual tax return.
You are required to give your collection agent or tenant your rental property’s Local Property Tax ID number and PPS number to allow them to use the new system.
What do I need to do if I live abroad and rent out a property in Ireland?
First of all, you will need to decide if you are going to strictly implement the existing system or switch to using the Non-Resident Landlord Withholding Tax (NLWT) System.
No matter which option you choose you will need to decide whether you are going to appoint a collection agent, or have your tenant deduct the tax (this may not always be practical).
Option 1 - Collection Agents
A collection agent is an Irish resident who collects the rent on your behalf. They may be an estate agent, or property management company, or an individual you nominate.
What will the collection agent have to do?
- Under the existing system, a collection agent can be nominated using Form NRL1, and that collection agent collects rent and has no withholding requirement. The collection agent will be accountable for the annual tax return and the payment of tax.
- If using the Non-Resident Landlord Withholding Tax (NLWT) System, in advance of receiving rent, collections agents will need to log into the NWLT system to report a rental payment. They will then need to deduct and withhold standard rate income tax from rents. They will no longer be responsible for filing tax returns in respect of those lettings.
Option 2 - Tenants
If you do not engage a collection agent, you may have your tenant withhold the tax due from the rent.
What will the tenant have to do?
- Using a strict implementation of the existing system, the tenant needs to withhold 20% of gross periodic rents, and pay it to Revenue. Form R185 documents this step and a copy of this form is given to both Revenue and the landlord.
- If implementing the online system your tenant needs to use the new NLWT system on their MyAccount portal to report a rental payment, and also to deduct 20% of the total rent due and pay it to Revenue. There will be new functionality added to MyAccount to allow tenants use this system.
Filing the tax return
Under the old system, there was an onus to file tax returns with the collection agent or tenant. If you implement the new system you will be responsible for filing your tax returns, whether you are an individual or trade through a company.
Please contact us if can be of assistance when filing tax returns.
The changes outlined above are significant for non-resident landlords. This new system is a substantial change for non-resident landlords to familiarise themselves with. Even if the existing system is used, flexibility is withdrawn from 01 July 2023 and everyone must adhere strictly to the system.
Frequently Asked Questions
Landlords need to register each of their tenancies with the Residential Tenancies Board (RTB) every year. This must be completed within one month of the anniversary when the tenancy began.
Yes, if you rent out a property you need to file a Tax Return each year and you will pay income tax on the difference between the rents you have charged in a tax year, less any allowable expenses and charges.
Yes, if you make money from renting with Airbnb you need to file a Tax Return. Also, where an Airbnb host generates income of €40,000 per annum they must register for and charge VAT at the appropriate rate and file the appropriate VAT Returns.
If you are an Irish resident, any rental income earned on an overseas property will also be subject to the Irish tax regime. You will be able to claim deductions to reduce your rental profit in the same manner as you would for your Irish property.
No, Local Property Tax (LPT) cannot be claimed as a deduction from your rental profit.
You need to make a Tax Return on your investment property regardless of whether it is profit or loss making. However, you should know that if you make a loss in one year this loss can be carried forward to reduce any future rental profits hence lowering your tax bill.
You may be able to reduce your taxable profit by claiming rental expenses incurred such as mortgage interest, repairs and maintenance, insurance and accountancy fees.
Capital allowances are an annual allowance for expenses incurred on capital items. An example of a capital item would be if you purchase a new boiler. Because this is considered a capital item for the property, the cost of this will be allowed over eight years.
From 2018 a new deduction of up to €5,000 per property for pre-letting expenses of a revenue nature are allowable subject to the property being vacant for a period of 12 months or more.
If you sell a property which is not your principal private residence you will be liable to capital gains tax (CGT) on any gain you make on the sale.
As part of Budget 2024 the Minister introduced a new landlord tax relief for the years 2024 to 2027. For these years, tax relief at the standard rate of tax will apply to a certain amount of rental income. Find out more
NLWT stands for Non-Resident Landlord Withholding Tax. The new NLWT system enables tenants or collection agents to make Rental Notifications (RN) when making payments to a non-resident landlord.
Date published 12 Jun 2023 | Last updated 2 May 2024
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Choose the right accounting firm for you
Running your own business can be challenging so why not let TaxAssist Accountants manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?
Local business focus
We specialise in supporting independent businesses and work with 6,246 clients. Each TaxAssist Accountant runs their own business, and are passionate about supporting you.
Come and meet us
We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accountant. You can visit us at any of our 23 locations, meet with us online through video call software, or talk to us by telephone.
Switching is simple
Changing accountants is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.