- Types of Rental Income
- What expenditure can be deducted?
- Rent a Room Relief
- Home Renovation Incentive
- Additional Information
- Reference Material
Types of Rental Income
Rental income derives from a number of sources including:
- the letting of property, e.g. houses, flats, apartments, offices and farmland,
- easements, e.g. payments for the right to erect advertising signs, communication transmitters or for the grant of a right of way,
- the granting of sporting rights, such as fishing and shooting permits,
- payments made by a tenant to defray the cost of work of maintenance or repairs to the premises, which is not required by the lease to be carried out by the tenant,
- certain premiums, including deemed premiums and reverse premiums. See How are premiums on leases treated for tax purposes?, in Revenue Guide to Rental Income for additional information,
- conacre letting (see Taxation of income from the rental of grazing and concacre land (PDF, 56KB) ,
- service charges in respect of services ancillary to the occupation of property,
- insurance recoveries under policies providing cover against non-payment of rent.
What expenditure can be deducted?
Broadly speaking, deductible expenditure is only allowable to the extent that it:
- would be allowable if the receipt of rent were treated as the carrying on of a trade during the currency of the lease or during the period in which you were entitled to the rent,
- is not of a capital nature, and
- is incurred by you.
The following are examples of expenditure that may be deducted:
- Ground Rent
- General Repairs (Capital Expenditure excluded)
- Management Fees: paid to an agent e.g. rent collection
Note: Landlords may not claim for their own labour.
- Service charges (water/refuse etc.)
- Advertising for tenants (please refer to "pre-letting expenditure")
- Accountants fees for preparing rental accounts
- Wear and Tear - Depreciation of furniture from a dwelling and fittings at the rate of 12.5% per year over 8 years.
- Interest - The deduction for interest accruing on loans used to purchase, improve or repair rented residential property is restricted to 75% of the interest accruing. From 1 January 2016, a 100% interest deduction is allowable where residential property is let to tenants in receipt of certain social housing supports for a period of 3 years. Relief for the additional deductions in respect of the 3 year period is by way of a claim to Revenue after the end of the period. See: Part 4 - Notes for Guidance - Taxes Consolidation Act 1997 (PDF, 1.32MB) for further information.
An individual who lets a room (or rooms) in his or her sole or main residence as residential accommodation may be exempt from income tax in respect of income from the letting where the aggregate of the gross rents and any sums for meals or other services supplied in connection with the letting does not exceed the threshold for the year in question. Please refer to IT 70 - A Revenue Guide to Rental Income for further information on this relief.
Home Renovation Incentive
In the case of rental property, the Home Renovation Incentive applies to repair, renovation or improvement work carried out on or after 15 October 2014 and up to 31 December 2016 by a qualifying contractor (or contractors), and on which VAT at 13.5% is charged. Expenditure to which the 23% rate of VAT applies does not qualify for relief.
A landlord may claim relief (by way of an income tax credit) where the total of all the qualifying expenditure incurred on each rental unit over the duration of the Incentive is not less than €4,405 excluding VAT (€5,000 including VAT at 13.5%).
- Rents outside the State - Rental income arising outside the State is chargeable to tax under Schedule D Case III.
- Pre-letting Expenditure - No relief is due for pre-letting expenditure except for auctioneers letting fees, advertising fees and legal expenses incurred on first lettings.
- Rent paid to non-resident landlord - If the rent is paid to an agent acting on behalf of a landlord, the agent is assessed on the rent. If, however, the rent is paid directly to a landlord abroad or into an account on their behalf, the tenant must deduct tax at the standard rate from the payments and remit that tax to Revenue.
- CGT - If let property is sold a liability to Capital Gains Tax (CGT) may arise.
Income Tax Capital Gains Tax Corporation Tax Manual -
- Part 4 (Principal Provisions relating to Schedule D Charges);
- Part 15 (Home Renovation Incentive);
- Part 45 (Persons Chargeable in Representative Capacity).