Irish Rental Income Tax

Rental income in Ireland can come from different sources, but it is typically seen as any money that is earned by renting out a house, apartment, building, office, or land.

Other examples include:

• Earning money by letting someone put up advertising signs or use part of your property.
• Allowing others to fish or hunt on your land for a fee.
• Income from renting out land for farming.
• Payments received for leasing out commercial spaces like warehouses or shops.

The tax you owe on rental income depends on the tax bracket you are in. If your earnings are within the standard rate band, you’ll pay 20%. Any income above that is taxed at 40%.

You’ll also need to pay PRSI and USC on this rental income.

For most landlords, you need to complete a self-assessment by 31 October each year.If you earn rental income and are a PAYE employee, and your rental income is under €5,000, you don’t need to do a self-assessment.

Instead, you must fill out and submit a Form 12 tax return by 31 October.

Both residents and non-residents will have a filing requirement if they receive any income
that falls outside the PAYE system, for example, rental income from either domestic or international sources.

The amount you earn and from what sources will determine if you have to file Form 11, Form 12, Form CG1, or Form IT38.*A chargeable person is someone who is in receipt of income liable to tax under the PAYE system and is also in receipt of gross non-PAYE income of €30,000 or more from other sources, such as trading or rental income, etc.

Even if your gross income is less than €50,000 you also will be regarded as a chargeable person if your net income (after deduction and allowances) is more than €5,000 net. Also note that if your gross income has been reduced to nil or a negligible amount because of deductions, losses, allowances, and other reliefs you will be still regarded as a chargeable person.

Form 11 will be required for any individual who is deemed to be a chargeable person.
Self-assessment customers are required to file Form 11 which is mandatory for individuals with significant income from non-PAYE sources.

In general, most PAYE workers are not required to file a Form 11, but are required to do so in certain circumstances where the non-PAYE income received is more than €30,000 gross per annum or greater than €5,000 net per annum. Company directors who own more than 15% of a company (i.e. proprietary directors) will have to file a Form 11, even if the majority of their income comes from the PAYE system. You will also be regarded as a chargeable person if you open a foreign bank account, acquire a foreign life policy, or have a material interest in an offshore fund or exercise share options.

Use Form 11 if you need to do a self-assessment and are considered a “chargeable person.”

Use Form 12 if the Revenue Commissioners have asked you to, or if you’re not a chargeable person but still want to pay tax on your rental (non-PAYE) income.

The deadline is 31 October in the year following the tax year to which the return relates
(i.e. for the 2023 tax year, the return is due on 31 October 2024). An extension of approximately two weeks is granted for online filing via Revenue’s Online System (ROS).

A Form 12 tax return is completed by those whose primary source of income comes from PAYE
income. In general, most PAYE workers do not have to complete Form 12 as they do not meet the criteria required to file a tax return. Revenue may also randomly select PAYE workers and issue a Form 12 for completion regardless of their income threshold.

People with an income of up to €5,000 net income and €30,000 gross income per annum from non-PAYE sources should also complete a Form 12. If the non-PAYE income is above this amount, a Form 11 tax return will have to be submitted.

Form 12 has the same deadline as Form 11 (31st October in the year following the tax year to which the return relates).

Landlord tax is typically calculated on the gross rental income, minus allowable expenses.

If you’re a resident landlord and your total income, including rent, is less than €40,000, you’ll face a 20% tax rate on rental income.

On the other hand, if your income surpasses €40,000, the part above that limit incurs a 40% income tax, along with a potential 4% charge for Pay-Related Social Insurance (PRSI).

It’s crucial to remember that you’re also obligated to pay the Universal Social Charge (USC) on your rental income.

Individual non-resident landlords tax rate in Ireland:

20% on the first €40,000 of gross rental income, and 40% on any remaining gross rental income.

Company non-resident landlords tax rate in Ireland:25% of gross rental income.

Yes, since 2014, Irish tax residents must pay 4% PRSI on the profit they make from rental income.

Yes, USC applies to rental income. The rates range from 2% to 10%, depending on your total income. You need to pay USC when you file your annual Irish rental income tax return in October.

Typically, landlords in Ireland don’t count rental or security deposits as rental income on their tax returns. However, if you use these deposits for repairs or other deductible costs, you can’t also claim those expenses as a tax credit.

Landlords can claim several expenses to reduce their taxable income. These include:

• Management fees
• Utilities, garbage collection, and other service charges
• RTB registration fees
• Insurance premiums
• Advertising costs
• Maintenance expenses
• Wear and tear

Make sure to keep all receipts and documents for these expenses, as you’ll need to provide proof for each deduction when you file your tax return.

There are certain expenses you cannot claim against your rental income. These include:

• Costs before the property was rented out
• Costs after the last tenant moved out
• Local Property Tax
• Costs for your own labor when fixing or maintaining the property

Yes, landlords can claim tax relief on the interest from their mortgage payments. This relief is available only for the time you’re registered with the Residential Tenancies Board (RTB).

The amount of mortgage interest you can claim back depends on when it was charged. However, you can claim tax relief on 100% of the mortgage interest accrued from January 1, 2019.

Capital allowances let you claim the cost of furniture, equipment, or appliances you buy for your rental property against your rental income. You can claim 12.5% of the cost each year for 8 years.

For example, if you bought a new cooker for €1,000, you can claim €125 each year for the next 8 years as a capital allowance.

Irish landlords should keep detailed records of everything related to their rental properties, even if it doesn’t seem important or deductible.

This includes records of your rental activity, invoices, bank statements, correspondence from building societies, check stubs, work orders, and receipts.
The Revenue Commissioners recommend keeping these documents for 6 years.

In the 2024 budget, a temporary tax relief was included for rental income aimed at supporting private landlords.

This relief, applicable at the standard rate of 20%, will be in effect from 2024 to 2027.

To qualify, you must keep the rental property on the market for the next four years.

The relief amounts to €3,000 in 2024, €4,000 in 2025, and €5,000 in 2026 and 2027, providing potential tax reductions of up to €600, €800, and €1,000, respectively.

However, if you exit the rental market during this period, the relief will be reclaimed.

Undeclared rental income in Ireland is considered tax evasion and can have serious consequences for landlords.

Landlords who fail to declare their rental income are liable to pay back taxes, interest on the unpaid taxes, and penalties. In some cases, they may also face criminal prosecution.

In addition to the risks outlined above, undeclared rental income can also lead to several other problems for landlords.

For example, landlords who undeclared rental income may not be eligible for certain tax credits or benefits.

They may also find it difficult to obtain loans or mortgages.

If you are a landlord in Ireland and you have undeclared rental income, it is important to come clean to Revenue as soon as possible.
Failing to comply with tax laws can lead to late filing penalties of either 5% or 10% and interest accruing on any outstanding tax liabilities.

The severity of the penalty will depend on several factors, such as the amount of tax owed, the time delay between the tax return being submitted, and the actual due date of submission.

The Rent a Room scheme lets you earn money from renting out a room in your home without paying tax on that income.

To qualify, you must meet certain conditions, such as:

• The room must be in your main home.
• You must rent it out for more than 28 days in a row.
• Your total income from renting the room must be below €14,000 per year (before any deductions).

If you meet these criteria, you can claim this tax relief.

It’s common for new landlords to experience a loss on their rental property, where expenses exceed income. Don’t worry—you only pay income tax once you start making a profit and after deducting any losses from previous years.

Even if you’re not making a profit, you still need to report any rental income to the Revenue Commissioners by filing a tax return.

Yes, you must register each new tenancy with the PRTB within one month of it starting. The registration fee is €90 per tenancy. You can claim this fee as an expense on your tax return.

Keep in mind: some expenses are only deductible if you’re registered with the RTB, so make sure your registration is current. 

Non-resident landlords in Ireland have two choices for handling tax on rental income.

One option is to appoint an Irish-based “collection agent” to handle Irish tax filing ( such as Property Tax International).

Alternatively, tenants can deduct the rental income tax (20% rate) from their rent and pay it directly to Revenue on the landlord’s behalf.

The landlord can later claim this as a credit when filing their property tax return. In either case, it’s crucial to note that the tax return for landlords must be filed with the liability paid by 31 October each year.

If you’re not using a Rent Collection Agent and your tenants are paying your rental

income tax, don’t forget to collect the filled-out Form R185 from them. You’ll need this form to claim the payment. If you make more than €5,000 from your property (after deducting expenses), you must register for self-assessment and report your rental income using Form 11.

If your rental income is less than €5,000, there’s a different way to report it as non-PAYE income. Landlords can be reimbursed for common expenses when calculating rental profit. They might also qualify for a portion of personal allowances. A tax professional from our team can guide you through all the tax details.

Yes.

If you live abroad but own a rental property in Ireland, you have two options for handling taxes on your rental income:

1. Your tenant can pay 20% of the rent directly to the local tax office and give you the remaining 80%. At the end of the year, they’ll fill out a form, which you then submit to the Revenue Commissioners to show that tax has been paid.
2. You can appoint a Collection Agent who lives in Ireland to collect the rent and handle your tax filings for you.

If you have more questions about  non-resident landlord tax in Ireland, feel free to request a no-obligation consultation with a tax advisor.

If you sold your rental property last year and have no other non-PAYE income, you don’t need to file a tax return for landlords for that year.
However, you might still need to pay Capital Gains Tax on the sale. If you have any other questions about your rental income tax return, feel free to get a quote or contact the experts at Property Tax International. 

Stamp duty is a tax in Ireland that you pay when transferring property ownership.
When you buy property in Ireland, you’ll sign a document that transfers ownership to you.

Afterwards, you need to:

• Fill out a Stamp Duty Return for this document
• Pay Stamp Duty for this document

Irish property can be:

• Land
• Buildings (residential like houses or apartments, and non-residential like offices or factories)
• Business assets (like goodwill)
• Shares in Irish companies

Yes, if you receive income from outside the PAYE system, you are legally obliged to file a tax return. Additional sources of income may include rental income (both domestic and foreign), share dividends, capital gains from the sale of assets, deposit interest from a foreign bank account, investments in off-shore funds, or any such source of income not subject to PAYE tax.

Yes, it is.

You can claim the same deductions for rental income from foreign properties as you would for domestic ones.

However, if you have a loss from a foreign property, you can only use that loss to offset future rental profits from the same foreign property. You can’t use it to offset rental income from properties in Ireland.

When a couple first marries they continue to be taxed as two single individuals under the Irish tax system. If the tax paid by both individuals is higher at the end of the year than if they were taxed as a married couple, a tax refund will be due. An Irish tax refund would occur in this instance where one spouse was on a different tax rate than the other and there were unused tax credits as a result of the new union.

Yes, Revenue allows the following options for married couples under the Irish tax system:

• Joint Assessment or Aggregation
• Separate Assessment
• Separate Treatment / Assessment as Single Individuals

The most common form of taxing married couples in Ireland is a joint assessment which is generally the most beneficial financially. One spouse will assume responsibility for the joint tax
liability and is generally referred to as the ‘assessable spouse’. The other spouse is referred to as the ‘non-assessable spouse’.

The Assessable Spouse:

1. Will have their combined income assessed for Irish tax purposes.
2. Receives standard tax rate banks and combined tax credits.
3. Is required to file a joint Irish tax return and include all details about the couple’s
   combined income.

Yes, the couple must elect to have themselves registered for joint assessment by 31st March in
the year following their marriage.

Yes, the married couple can elect to have their tax relief and tax credits split between them,
but it should be noted that employment expenses and PAYE tax credits are not eligible for transfer.

Revenue will issue two tax certificates to a married couple where both spouses are in employment.

Yes, a married couple can choose to be taxed separately and file separate Irish tax returns if
required. This is known as ‘separate assessment’.

Under this method following credits are equally divided between spouses:

• Married Personal tax credit
• Age tax credit
• Blind tax credit
• Incapacitated Child tax credit

Where there are unused credits or standard rate bands (other than the Employee tax credit and Employment expenses or the increase to the standard rate band) this can be transferred to the other spouse in the following tax year.

This is a common situation that we are seeing more and more of lately. From your resident country’s point of view, this is perfectly fine but there are two situations here that should be noted:

• Firstly, when you include your foreign rental income with your annual resident tax return, there are often several deductions that are not included as each tax system has its own rules and regulations. Unless the person preparing your resident return is familiar with the foreign tax system and speaks the language, they will not know what costs can be written off. This is also the most inefficient tax method for declaring your income as, in addition to the above you will also be subject to income tax which in many cases can be above 40%.
• Secondly, while the above situation will meet your tax obligations in your resident country, you may not meet your tax obligations in the overseas country, which can leave you exposed to the possibility of fines, penalties, and interest being imposed by the foreign tax office.

If you receive rental income abroad, your first obligation is to the tax authorities where the income was received. The main objective of any tax return is to reduce your taxable income by as much as possible. Once the taxable income is determined, tax is paid based on the income tax rate applicable to non-residents (if different than the resident income tax rate).

If a tax liability is due, a payment is made to the tax office. It is at this point that the Double Taxation Agreement (if available) would come into force which would ensure that you do not pay tax twice on the same income.

Declaring income in the overseas country first is the most tax-efficient way of ensuring your taxes are in order. PTI Returns can provide more advice on this if you’re unsure of your obligations. We can help you stay tax-compliant across multiple jurisdictions.

Separate treatment or Single Treatment is not to be confused with Separate Assessment. Under separate treatment, each spouse is considered an individual and is taxed under the same method as a single taxpayer.

Under this method each spouse:

1. Has an obligation to file a personal Irish tax return.
2. Is assessed on his/her income.
3. Is treated as a single person and therefore receives the equivalent tax credits and rate bands as a single taxpayer.
4. Has no right to claim relief for payments made by the other spouse.

Rent paid to a non-resident landlord is subject to specific guidelines. Your Account Manager can provide you with more information on your obligations.

For a list of the double taxation treaties Ireland has entered into, click here.