Page 39 - Signal Summer 2018

| FINANCE |

Rental Income

Do you have a rental property in Ireland or overseas? If so, you may
have a tax liability on the income and must prepare and file an Irish
tax return. By Rory Coll of Coll & Co Financial Advisors.
The tax due on rental income is collected under what is Revenue may impose an income tax surcharge of 10%,
known as the self assessment system, i.e. you must file where an individual has not filed their LPT return. How-
an annual tax return disclosing details of your rental profit ever, the LPT surcharge may not apply where the LPT
or loss and pay the tax arising when filing your return with return is filed and payment is made before the income tax
Revenue. The deadline for filing your 2017 income tax re- return is filed.
turn is 31 October or 14 November 2018 where you As with the LPT, Revenue are increasing its enforcement
st
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are filing using a Tax agent or Revenue’s Online Service activity in order to recover unpaid Household Charge from
(ROS). 2012, which since 1 July last is treated as €200. Therefore,
What happens if I have already paid income tax on it is advisable to file and pay any outstanding amounts as
my overseas property to the relevant country where it soon as possible to avoid further interest and penalties.
is located? What happens if my expenses exceed the rent I re-
Unfortunately, you must also file a rental return in Ireland ceive?
prepared under Irish tax rules but you may be allowed a A loss will arise if total allowable expenses are greater
full credit for the tax paid against your Irish income tax li- than the rents received. This loss can be set against any
ability. profit from renting other Irish properties or carried forward
What expenses am I allowed to deduct from my against future rental profits. Unfortunately, such losses
rental income in relation to the property? cannot be used to shelter non-rental income for example
The following are examples of the type of allowable ex- trading income/PAYE salary.
penses: I am renting a room in my home, is this rent taxable?
- Rates, service charges, waste collection etc. Where you rent a room (or rooms) in your home and the
- Mortgage interest paid (subject to certain restric- rent received, including sums arising for food, laundry etc,
tions) on monies borrowed for the ‘purchase, im- does not exceed €14,000 this income is exempt from in-
provement or repair’ of the property’. come tax. However this income must still be declared in
- Insurance & Advertising Costs your annual tax return to Revenue. This is known as ‘Rent
- Management fees & Accountancy fees a room relief’.
- Repairs, decorating, general maintenance and Does Rent a Room Relief affect any other reliefs or
cleaning costs. taxes?
- PRTB registration fees If you qualify for Rent a Room Relief you can still avail of
From Jan 1 2017 you can generally deduct 80% of the the following:
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mortgage interest paid in respect of residential lettings. 1. Mortgage Interest Relief or Owner-Occupier Relief.
In addition, a wear and tear allowance can be claimed 2. The rental income will also be exempt from Pay Re-
in respect of furnished lettings. This will normally cover lated Social Insurance (PRSI)and Universal Social
electrical appliances, furniture and fittings etc. Charge (USC).
Do I need to register with the PRTB in order to claim 3. Capital Gains Tax (CGT) exemption if you decide to
the deductions? sell your home.
Yes. Where you fail to register your tenancies with the What about rooms or property let out on websites
Private Residential Tenancies Board (PRTB), you will lose such as Air BnB?
your entitlement to claim mortgage interest as a deduc- Revenue have recently clarified that the provision of
tion against your rental income from that property. short-term accommodation to a tourist, holidaymaker etc
I paid the Household Charge on my rental property for periods not exceeding 8 consecutive weeks will NOT
for 2017, can I deduct this expense? qualify for Rent a Room Relief and will be liable to Income
Unfortunately, there are currently no provisions which al- Tax. In addition to filing a tax Return, you may have to reg-
low for a tax deduction for the Household Charge against ister for VAT.
rental income received. Similarly, the Local Property Tax You also may be liable to Capital Gains Tax on the sale
(LPT) Charge, introduced in 2013, is not an allowable of the property generating this rental income which might
rental deduction at present. otherwise have been tax exempt.
I have not yet filed my LPT return; will that affect my Coll & Co, specialise in tax and offer special rates to RACO
tax liability on my rental income? members. Contact us now to arrange an hourly consultation
at 091 592080. www.coll.ie

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