Being a landlord in Ireland comes with several tax obligations. From income tax to property taxes, landlords need to understand what they are required to pay and how to remain compliant. This guide will break down the key taxes for Irish landlords.
Rental Income Tax in Ireland
The main tax landlords pay is income tax on the profit earned from renting out properties. This rental income gets added to your total income for the year and taxed accordingly.
The standard rate of income tax on rental profit is 20% for earnings below the standard rate cutoff. Income above the cutoff is taxed at 40%. The cutoff amounts for 2024 are €42,000 for a single person and €51,000 for married couples or civil partners.
In addition to income tax, landlords must also pay PRSI and USC on rental profits. The rate of PRSI is 4% for Irish tax residents. Non-residents do not pay PRSI. The USC ranges from 0.5% to 8% depending on total income over €13,000.
To calculate rental income tax, landlords should subtract allowable expenses from the gross rental income. Allowable expenses include repairs, agent fees, interest, utilities, insurance and more. Costs that cannot be deducted include stamp duty and expenses incurred before the property is rented.
Property Taxes in Ireland
In addition to taxes on rental income, landlords in Ireland also need to pay some taxes related directly to owning and selling the property itself.
Local Property Tax (LPT) is an annual tax paid by property owners based on the market value of the property. LPT applies to all residential properties including rental properties. The LPT rates range from 0.1029% to 0.3% of the property value depending on the band.
Capital Gains Tax (CGT) applies when selling a rental property that has increased in value. The CGT rate in Ireland is currently 33% of the taxable gain or profit earned from the sale.
Calculating CGT involves subtracting allowable expenses from the sale price and the original purchase price. Expenses like legal fees and renovations can reduce the taxable gain and thus the CGT paid.
Obligations for Irish Landlords
To remain compliant with their tax obligations, Irish landlords need to:
- Register all tenancies with the Residential Tenancies Board (RTB) within one month
- Keep detailed records of all rental income and expenses
- Pay LPT annually by November 1st
- File a tax return declaring rental income by October 31st
- Pay preliminary income tax by October 31st
- Keep records for at least 6 years
Landlords who rent a room(s) in their residence may qualify for Rent-A-Room relief allowing up to €14,000 tax-free per year.
Non-resident landlords still have to comply with Irish tax rules. They can have the tenant deduct tax from payments or appoint a collection agent.
Using a tax filing service can help landlords ensure they maximize deductions, complete all required forms, and avoid penalties for non-compliance. Paying the required taxes is part of being a landlord, but with some planning, it can be manageable.
Let me know if you would like me to modify or expand any part of this overview on the key taxes for Irish landlords. I can also provide references for any statistics or rates mentioned.
If you need assistance understanding your tax responsibilities or filing your rental income tax return as a landlord, the tax experts at KPM Property Management can help. Contact them today to have your taxes filed correctly and maximize your deductions. With decades of tax experience specific to Irish landlords, KPM’s tax team can ensure you pay only what is required and avoid penalties. Reach out for a consultation to learn how KPM can assist with your landlord taxes.
