Irish rental income

Premiums on leases

You may receive a premium for granting a lease that lasts for less than 50 years. If you do, part of the premium will be treated as rent.

Your premium is assessed in the first year. You must calculate the portion to be treated as rent. To calculate this, use the following formula:

P - ((N - 1) / 50) x P

P = the amount of the premium paid

N = the duration of the lease.

You will be assessed on this amount, as well as any rental profit.

  • Example

    You let a property for a period of 18 years at an annual rent of €25,000. The tenant pays a premium of €70,000.

    Calculate gross rents
     CalculationValue
    Portion of premium to be treated as rent €70,000 - ((18-1)/50) x €70,000

    €46,200
    Rent 

    €25,000
    Total 

    €71,200

Payments treated as a premium also include:

  • a lump sum paid in place of full rent
  • a sum paid for the surrender of a lease
  • and
  • a sum paid for the variation or waiver of a lease.

An increase in the value of the rental property can also be treated as a premium, where the renter is obliged to carry out work on the property.

Please see the Leases manual for further information.

Next: How do you declare your rental income?

Published: 14 February 2025 Print this page

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