PROPERTY RENTALS TAX RELIEF
ALLOWABLE EXPENSES FOR LANDLORDS
If you are a landlord, or considering becoming one, the Irish Times newspaper recently published a list
of possible expenses that you may be able to claim against the rental income you receive.
It is not that simple to set out a complete list of the allowable expenses, mainly because the Revenue groups allowable expenses by type.
The Revenue publish a document called IT70, A Revenue Guide to Rental Income, which is the definitive guide to expense claims.
A maximum of 75 per cent of the interest paid by you, if you need to take out a mortgage to purchase an investment property. Budget 2016 may increase this to 100 %, as a way to encourage potential landlords to take the plunge and allow more properties to be made available in the rental market, although this increase this is not yet a certainty.
If you employ a letting agent, either a service provided by an estate agent or a dedicated property management company, then any fees you pay them are an allowable expense against your rental income from the property, before assessing your income tax liability.
You can also claim against the insurance premiums you pay to insure the house or apartment and its contents. As a side issue to this, you can claim under expenses the cost of the premium protection policy that your lender will require before granting the mortgage.
Another straighforward expense is the cost involved in advertising the property for rent in your local paper or on Daft.ie or MyHome.ie, although these amount's are likely to be minor compared to other fees as, especially in urban areas, your property will probably rent out pretty quickly, unless it is in bad condition or you have overcharged compared to the going rate for your area.
You can check the latest rental prices in your area by clicking on HOUSE RENTAL COSTS GUIDE.
You can claim against the fee to needed to pay the Private Residential Tenancy board, currently this amounts to € 90 per tenancy, provided the completed application to register is received by the PRTB within one month from the tenancy commencement date. Registration with the PRTB is required by law for all landlords, also by failing to do so, it will prevent you from claiming relief on the interest you pay for your mortgage. A late fee of € 180 applies where an application to register a tenancy is received more than one month from the tenancy commencement date.
A few other fees that are available for offset against tax are the legal fees involved in producing rental lease documents, any fees you may have paid to an estate agent when you bought the house or apartment, also any similiar fees in selling it. Another possible tax saving can be made by claiming against accountancy related fees.
As soon as the property is let out, you can claim for charges made by tradespeople in the maintainance of the property, although you cannot claim for your own time spent fixing up problems around the house.
Finally, you can claim against the cost of materials you bought to furnish your rental property. Revenue may allow such "capital allowances" at a rate of 12.5 per cent per year over eight years. However, bear in mind that capital allowances do not cover costs incurred in extending, altering or refurbishing your property.
The information provided above is liable to change at any time. All information supplied by IrishHouses.ie is subject to errors & omissions and does not constitute legal, investment or any other form of advice. Always obtain independent professional advice for your own particular situation.