Last Updated on October 9, 2024 by Kristina Valcheva
If you are earning rental income from a property in Ireland, you will have some tax responsibilities that require attention.
Maybe you are even wondering if you can avoid paying rental income tax in Ireland.
This article serves as а compass to guide residents and non-resident landlords alike through the labyrinthine world of tax on rental income in Ireland.
We will answer some of the most common questions that landlords ask about saving on taxes and discuss our top tips for filing property taxes without stress.
Do I have to pay taxes on rental income in Ireland?
Regardless of residence status, every landlord needs to collect and annually pay the corresponding landlord tax in Ireland to the Irish Revenue through an Income Tax Return.
This applies to all kinds of rental income, be it from houses, flats, apartments, offices, or even farmland or conacre lettings.
For non-resident landlords, a noteworthy point is that they have to file tax returns both in their home country and in Ireland.
However, double taxation agreements provide a safeguard against being taxed twice on the same income and a tax professional can help you with this.
How do I pay tax on rental income in Ireland?
If your net rental income in Ireland exceeds €5,000, you must register for self-assessment, and declare it on your property tax return in Ireland (Form 11).
If you earn less than €5,000, you must file Form 12 (used by residents and non-residents).
You can do all of this yourself or use the help of a property tax advisor.
Our tax professionals can deal filing rental income tax return online if you rent out property in Ireland regardless of your residency status. We can also assist you with rent collection if you are a non-resident.
How do I pay taxes in Ireland as a non-resident landlord and collect rent?
Non-resident landlords in Ireland have several choices regarding how they handle rent collection and file property tax returns in Ireland.
1. Tenant tax withholding
Firstly, your tenant can keep aside 20% of the monthly rent and use it to pay taxes on your behalf to the Revenue.
Keep in mind also that you can claim a credit for the tax deducted by your tenant on your Irish property tax return.
Don’t forget to submit the Form R185 they have filled out to claim this payment.
While arranging with your tenant may seem like the easier route, putting the task of paying taxes on your renter every month is a significant responsibility, and you can’t ensure it’s done correctly and on time.
This approach is most effective for tenants you’ve known and trusted for a long time, or for situations where there’s a well-established relationship between landlords and tenants, like family friends.
2. Appointing an Irish collection agent
This is typically a professional such as a property tax specialist who can handle your tax responsibilities in Ireland and the rent collection.
This Irish collection agent is assigned a unique PPS number for property-related tasks, collecting rent, filing taxes, and ensuring tax obligations are fulfilled.
This approach is particularly effective for landlords who have minimal interaction with their tenants or those who own multiple properties.
In these situations, designating an Irish Rent Collection Agent can lead to cost savings over time, as failures to pay, inaccuracies, or late tax payments can result in substantial fines.
Irish rent collection service for non-resident landlords
Can an Irish Rent Collection Agent help non-resident landlords reduce their tax liability?
The 20% withholding tax required from the tenant is applied to the gross rental income before any expenses are subtracted.
Nevertheless, both resident and non-resident landlords in Ireland can benefit from various allowable expenses. These costs are deductible from your overall rental income, yielding your net taxable rental income.
As a result, your eventual tax obligation might be notably less than the initial 20% deducted by your tenants and this is where a rent collection agent or a tax professional can help.
Is it possible to avoid paying tax on rental income in Ireland?
Paying tax on rental income is generally a legal requirement in Ireland.
However, there are legitimate ways to minimize the amount of tax you pay on rental income by taking advantage of allowable deductions and expenses, and a tax advisor can help you with this.
What expenses are allowed against rental income in Ireland?
Here you can find the allowable expenses for rental income in Ireland that you can claim and those that you cannot.
What is the Non-Resident Landlord Withholding Tax (NLWT)?
Starting from 1 July 2023, a new system called the Non-Resident Landlord Withholding Tax (NLWT) will take effect.
When non-resident landlords receive rent, Rental Notifications (RNs) will be sent by either collection agents or tenants.
These agents or tenants will hold back 20% of the rent payment and send it to the Revenue authorities.
This amount will be kept and added to the non-resident landlord’s account when they file their yearly tax report. If you’re an individual, you’ll use Form 11 for your return, and if you’re a company, it’s Form CT1.
What’s the Rent-a-Room Scheme in Ireland?
Have you come across the Rent-a-Room scheme?
It presents a unique opportunity for homeowners to earn a gross income of up to €14,000 simply by renting out a room within their property.
An important note here is that you must be living in the house to claim it.
Here’s the catch: no taxes are involved.
While property ownership isn’t a prerequisite, your dwelling must indeed serve as your primary residence.
The €14,000 figure denotes your total earnings before the subtraction of any expenses. However, should your earnings surpass this threshold, the entire amount becomes subject to taxation.
Let’s delve further into the specifics.
The designated room must be an integral part of your residence, whether situated within the basement or attached to a garage.
It’s essential to note that this relief exclusively pertains to rooms directly linked to the main house. Moreover, the tenant utilizing this space must commit to a long-term occupancy arrangement, excluding short-term stays.
Interestingly, even though you’re exempt from taxes, you still need to meet your responsibilities by submitting a yearly tax return in Ireland, where you reveal your tax-exempt earnings.
Do you have to pay tax on Airbnb income in Ireland?
When it comes to Ireland, you’re required to pay taxes on the money you earn through Airbnb.
The key twist here is to figure out whether your Airbnb activity is more like a trade of short-term guest accommodation rather than the usual rental income in Ireland.
This differentiation depends on how frequently you decide to rent out your place and whether you intend to generate a business-oriented profit.
If that’s the case, you might even be eligible to snag some specific deductions, like capital allowances and expenses that popped up up to three years before your official business kick-off.
This means you could potentially subtract costs like repairs, such as a fresh coat of paint.
On the flip side, if your Airbnb renting is more of an irregular or occasional happening, it won’t quite fall into the category of a short-term guest lodging business. This distinction holds weight because it impacts the kind of deductions you’re permitted to knock off from your rental earnings.
Can you claim expenses on short-term guest accommodation in Ireland?
If your role doesn’t exactly match the short-term guest hosting trade, you can only deduct certain costs that directly relate to providing accommodation.
This covers things like the commission paid to booking websites, cleaning charges, expenses for guest breakfasts, and a reasonable part of utility bills, such as electricity, gas, and heating.
However, those everyday property expenses, like insurance, TV fees, and overall upkeep costs, don’t directly tie into the accommodation service.
Since these costs are often there whether you’re offering services or not, they don’t qualify for deductions. So, things like capital allowances or deducting expenses before you start aren’t applicable in this case.
Remember, understanding what expenses you can deduct can get a bit tricky, and the specifics of your situation matter.
It’s smart to talk to a tax professional who knows the ins and outs of Irish tax rules.
They can help figure out what expenses you can deduct and make sure you’re playing by the tax rules.
When is the deadline for the rent tax return in Ireland?
Annually, you need to report your rental income in Ireland to the tax authorities. The deadline for filing Irish rental income tax return and payment is 31 October of the subsequent year.
To ensure a smooth process, it’s recommended to initiate the preparation of your tax return in Ireland well before the deadline.
This approach provides ample time to collect required paperwork, precisely compute earnings and costs, and consider enlisting expert assistance or a tax accountant with landlord taxation expertise.
Who can help me file my rent tax return in Ireland and with the rent tax collection?
Are you looking for property tax specialists?
We know that filing taxes in Ireland and dealing with the tax paperwork can be a daunting process and this is where our tax specialists can assist.
Who are we?
Property Tax International (PTI Returns) is part of CluneTech (formerly recognized as Taxback Group), which operates across more than 20 countries with a workforce of over 1,500 professionals.
We have more than 25 years of experience in international property tax, and we will keep you compliant with the Irish tax authorities.
Our tax professionals will help you file your rent tax return in Ireland irrespective of your residence status.
We also offer a rent tax collection service which is available only to non-residents. Dealing with your annual tax return obligation is part of the offering.
Should you have any unanswered queries, feel free to seek further assistance by requesting a free callback from our team of tax professionals.