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Irish rental income

  1. Overview
  2. What expenses are allowed?
  3. What expenses are not allowed?
  4. Rental profit and losses
  5. Tax incentive schemes for rental Income
  6. Premiums on leases
  7. How do you declare your rental income?

Premiums on leases

If you receive a premium for granting a lease that lasts for less than fifty years a portion of the premium will be treated as rent. Your premium is assessed in the first year.

You use the following formula to calculate the portion to be treated as rent:

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.

See the example below.

  • Example 1

    A property is let for a period of 18 years at an annual rent of €25,000. A premium of €70,000 is paid. Gross rents are calculated as follows:

    Premium 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
  • 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.

See the Leases manual for more information.

Next: How do you declare your rental income?

Published: 18 October 2017 Print this page

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