o, not in totality, but any expenses incurred relating to property management before a landlord leases their first property are tax deductible.
This article will examine what can be done to reduce your tax liability as a landlord.
What expenses are tax deductible in Ireland?
Several expenses can be claimed to reduce tax liability. What you are eligible for will depend on your circumstances.
The following expenses may be eligible for claiming:
- Registration fees with the Residential Tenancies Board (RTB).
- Management/agency, advertising, legal, or accountancy fees.
- The cost of any services or goods the tenant does not repay, including electricity, central heating, telephone, service charges, water, and refuse collection.
- Certain mortgage protection policy premiums may also be deductible.
- Capital allowances.
- Certain expenses between renting out the property may be eligible for claiming in certain circumstances.
What expenses are not allowed?
Before the initial rental of a property, expenses incurred concerning the property, apart from property fees, may be considered pre-letting expenses. However, some pre-letting expenses for vacant residential property may also not be deductible.
Capital expenses on property improvements may not be deductible unless allowed under an incentive scheme.
In addition, expenses incurred on premises rented out on an uneconomic basis, where it is impossible to profit from the rent received, may not be deductible. (renting to the family at a discount. etc.)
Local Property Tax (LPT) may also be included as an expense. However, any costs for the owner’s labour when repairing the property may not be considered a deductible expense.
Is property maintenance/renovation tax deductible?
Property upgrades and repairs are another areas landlords can reduce their tax liability. For example, any manual labour on the property is tax deductible, such as painting, plumbing or electrical work.
Is there VAT on property management fees?
Yes, property managers will operate services and buy required items on behalf of the landlord. They do this for a % of the rent, and this % is VAT chargeable.
Tax incentive schemes for rental income
Owners of rental properties may be able to apply for the following incentives:
Home Renovation Incentive
Home Renovation Incentive (HRI) is a scheme available to landlords, homeowners and local authority tenants. This tax credit can be claimed for any repairs, improvements, or renovations to their respective properties.
Living City Initiative
The Living City Initiative is an incentive program reserved for special areas of regeneration (SRA)
These areas include Cork, Dublin, Galway, Kilkenny, Limerick and Waterford.
Leasing your farmland
The Leasing of Your Farm Land Scheme allows you to reduce your income tax on specific income areas from leasing your farmland.
For more information, go to Leasing your farmland.
KPM Property Management
KPM is an experienced property management company; if you need help to maximise profits or streamline your efficiency, our excellent team can help.
When you employ KPM to manage your property, you effectively remove the monotony of day-to-day tasks while increasing your potential return on investment.
KPM manages 22,000 properties across Ireland and is well-versed in assisting landlords with one property or landlords who may own multiple investment properties nationwide.
If you would like a free no-obligation consultation, then contact us today.
