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10 Tax Tips for Landlords
As the 2023 tax return deadline approaches landlords are preparing to file
By Tadhg MoriartyAll across Ireland thousands of landlords are currently preparing their 2023 tax return that is due to be filed this month.
Here are 10 useful Tax Tips for landlords that may help you when completing your self-assessment tax return:
1. Rent a room relief
It’s important to keep in mind, that if you rent a room in your principal residence to a third party you may be able to earn up to €14,000 tax free. If the amount you earn exceeds €14,000 the total amount will all be taxable. Revenue have confirmed in their guidance that this relief excludes the provision of accommodation to occasional visitors for short periods so for example Airbnb guests.
2. Claiming rental expenses
If you rent out an investment property, one that is not your principal residence, there is no rent a room relief available, the entire rental profit is subject to tax. You will however, be able to reduce the taxable profit by claiming rental expenses incurred such as mortgage interest, repairs and maintenance, insurance and accountancy fees. Make sure you include these expenses in your tax return.
You may also be able to claim pre-letting expenses. Landlords can claim a tax deduction for pre-letting expenses up to a value of €10,000, where a property had been vacant for at least 6 months.
3. Rental losses
There is a common misconception that when a property is let, it only needs to be declared on a tax return once it is profitable. This is not the case. Your investment property information needs to be returned 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. If you have more than one property any losses, you make can also be offset in the current year against other Irish rental profits.
4. Local Property Tax (LPT)
The LPT is payable on investment properties in Ireland. If you have not paid this you should do so straight away as Revenue can enforce surcharges on income tax returns. LPT cannot be claimed as a deduction from your rental profit.
5. Residential Tenancies Board (RTB)
Landlords need to register each of their tenancies with the Residential Tenancies Board (RTB) ever year. This must be completed within one month of the anniversary of when the tenancy began.
The cost to register tenancies is €40 per year for private rentals, cost rentals and Student Specific Accommodation (SSA) rentals. The yearly fee for tenancies managed by Approved Housing Bodies (AHBs) is €20 per year.
For more information you can visit the RTB Online Account Information Hub here
6. Overseas Properties
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.
You may also be liable to tax in the foreign country and should consult an accountant in the relevant country. If you pay tax abroad, you should be able to offset this against your Irish tax.
However, any loss on foreign rental property is restricted to your foreign portfolio, it cannot be offset against Irish income. LPT and RTB do not apply to foreign investment properties.
7. Joint Ownership
If you own a property jointly you will be taxable on your applicable percentage of rental income earned. You will also have the right to claim expenses of the property in this proportion and be taxed on that basis.
8. Commercial Property
If you let a commercial property you will be liable to tax on the rental profit earned. This is calculated in the same manner as a residential property. Irish residential losses can be offset against Irish commercial profits, and vice versa.
9. Moving out and renting your home
Subject to certain exceptions, moving out of your property converts the house into an investment property rather than your Principal Private Residence. Any rental income (less any tax-deductible expenses such as mortgage interest) on the let of your former home is taxable and would need to be declared on your tax return.
10.Bank Accounts
You may wish to consider operating a separate bank account for rental activities, to improve efficiencies from an administrative perspective.
Note on new Landlord Tax Relief for 2024
As part of Budget 2024 the Minister is introducing 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. As this relief commences from the year 2024 it will take some time for landlords to feel the benefit of this measure.
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TaxAssist Accountants offer a Tax Return service specifically for landlords or those with second properties. By working with a professional to file your returns you can have peace of mind that everything is filed accurately minimising your risk of a Revenue enquiry into your tax affairs. It also ensures you do not pay any more tax than you need to.
And accountancy fees can be offset against tax!
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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 5 Oct 2021 | Last updated 30 Oct 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.
Tadhg Moriarty
Tadhg Moriarty is a highly skilled Chartered Accountant, Chartered Tax Consultant and Chartered Tax Advisor with over 15 years of experience. Tadhg has worked with private clients and family run enterprises and has a deep understanding of the unique challenges faced by these businesses. He is committed to helping his clients optimise their tax positions and improve their financial performance.
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