- What types of Rental Income are there?
- Allowable Deductions
- Rent a Room Relief
- Reference Material
- Additional Information
What types of Rental Income are there?
- Rental income from letting a house, flat, apartment, office, building etc. is the most common type.
- Income from easements, i.e. if payment is received for the right to erect advertising signs, communication transmitters, conacre or grazing rights.
- Certain leases, normally on non-residential property such as a shop or warehouse, that requires the payment of a premium by the tenant to the landlord. Where the lease granted is of less than 50 years, some of the premium charged will be treated as rent.
A person may claim a deduction from gross rent for legitimate property related expenses as follows:
- 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
- Accountants fees for preparing rental accounts 96/97 onwards.
- Wear and Tear - Depreciation of furniture and fittings
- With effect from 4 December 2002 the allowance is 12.5% per year over 8 years.
- For the period between 1 December 2001 and 3 December 2002 the allowance was 20% per year over 5 years. Transitional provisions apply allowing the rate of 20% per year over 5 years if the item was acquired under a written contract before 4 December 2002 and the expenditure was incurred before 31 January 2003.
- Prior to 1 January 2001 the allowance was 15% per year for the first 6 years and 10% in the 7th year
- Building Expenditure - in a Renewal incentive area
- Interest - Relief is due for 75% of interest paid on loans to purchase, improve or repair a residential premises (some exceptions).
Note: No relief due on interest paid on loans granted between 23/4/1998 and 31/12/2001 inclusive.
During this period interest relief continued to be allowed for
a) Commercial lettings and
b) Existing residential lettings at 23/4/98, provided the landlord owned the premises at 23/4/98.
Where an individual lets a room (or rooms) in his or her sole or main residence as residential accommodation, the income may be exempt from income tax where the aggregate of the gross rents and any sums for meals or other services supplied in connection with the letting is below a certain threshold, (currently €10,000 per annum). This relief is subject to a number of conditions. Please refer to IT 70 A Revenue Guide to Rental Income for further information.
- Rents outside State - Rental income arising outside State is assessed under Schedule D Case III.
- C.G.T. - If let property is sold a liability to C.G.T may arise.
- Pre-trading Expenditure - No relief is due for pre-trading 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 landlord, agent is assessed on the rent.
If however the rent is paid to the landlord abroad or to an account on his behalf the tenant must deduct tax at the standard rate from the payments and remit that tax to Revenue.