Irish rental income

What expenses are allowed?

You calculate how much tax you owe on the gross rents receivable after deductions for expenses and allowances. A profit or a loss is calculated for each rental source. The rental income on which you pay tax is the total profits less the total losses.

General expenses

You can claim certain expenses against your rental income to reduce the amount of tax you will have to pay.

Allowable expenses include:

• rates you pay to a local authority for the property
• rents you pay for property such as ground rents
• insurance premiums against fire and public liability
• maintenance of your property such as cleaning, painting and decorating
• property fees before you first rent out your property such as management, advertising, legal or accountancy fees
• the cost of any service or goods you provide that do not get repaid by your tenant such as electricity, central heating, telephone, service charges, water and refuse collection
• certain mortgage protection policy premiums
• expenses in between renting out the property in certain circumstances
• capital allowances
• repairs, such as rot treatment, mending windows, doors or machines.

You must keep full and accurate records of all expenses for each property you rent out.

For deductible expenses, the receipt of rent is treated as the carrying on of a trade, and expenses are only allowed to the extent that they would be allowed for that trade.

Mortgage Interest

You may be allowed claim Mortgage Interest against your rental income. The interest must be from a mortgage that is used to purchase, improve or repair your rental property.

You can claim Mortgage Interest Relief:

• while your property is rented out
• in between renting out the property as long as you do not live in it during that time
• if you are registered with the Private Residential Tenancies Board (RTB).

You can not claim Mortgage Interest between the time you buy the property and the time you first rent out the property.

From 1 January 2017, you can deduct 80% of the interest paid on your mortgage on a rental property. For earlier years, the figure is 75% of the interest paid.

In certain situations, you may be able to claim 100% mortgage interest relief. To qualify you must:

• rent out your property for three years to tenants receiving certain social housing supports.
• be registered with the Private Residential Tenancies Board (RTB).

See the manual Part 04-08-06 for more information on the deduction of Mortgage Interest.

See the manual Part 04-08-10 for more information on registering tenancies with the PRTB.

Capital allowances

You can claim capital allowances, known as 'wear and tear allowances' or 'depreciation'. These are based on the cost of furniture and fittings for your rental property.

The current rate for these allowances is 12.5% of the cost, which is spread over eight years. The allowances may include:

• furniture you purchased for your rental property
• the cost of the purchase of white goods such as a fridge or a dishwasher.

See the manual Part 04-08-12 for more information on capital allowances and rented residential premises.

Next: What expenses are not allowed?