When renting out a property, landlords can expect to incur various taxes, including income tax on rental income and Local Property Tax.

However, several allowable deductions can help offset taxable rental income, along with specific rules for non-resident landlords…

What taxes can I expect to incur if I rent out my property?

Income tax is charged and calculated on rent received subject to certain deductions. In addition, the landlord is liable to pay the Local Property Tax

What deductions are considered allowable expenses?

• Estate agents fees
• Qualifying mortgage interest; since January 1st 2019, 100% of interest on borrowings for purchase, improvement or repair is allowable
• Advertising costs
• Management Fees
• Insurance premiums
• RTB registration fee, properties must be registered to claim mortgage interest relief
• Mortgage protection policy premium
• Accountants fees
• Refuse and other service charges
• Costs of repairs and maintenance
• Pre-letting expenses of up to €16,000 are allowable if the property has been vacant for 6 months before the first letting

What expenses can’t be deducted?

• Pre-letting expenses over €16,000 and/or those incurred if the property is vacant for less than 6 months before the first letting
  Post-letting expenses, i.e. expenses incurred after the period of the last letting are not allowable
  Mortgage interest when the property is not let out for significant periods

What is capital expenditure and can it be deducted from your rental income?

There are two types of capital expenditure.

1. The first type would be for furniture, fittings, equipment such as kitchen and bathroom appliances and other household items. This expenditure can be written off over 8 years. (12.5% of the cost can be deducted each year). These tax deductions are called capital allowances. For example, if you purchase a suite of furniture for €1,000 a capital allowance of €125 per year can be offset against the rental income for tax purposes for the next 8 years.
2. The second type of capital expenditure would generally add value to the property such as building an extension and in the event of a sale this expenditure is deductible for capital gains tax purposes but it is not deductible for income tax purposes.

Can profits on one rental property offset losses on another?

A profit on one rental property can be offset against the loss on another property provided they are owned by the same landlord.

Can losses be carried forward to the following year?

Losses can be carried forward indefinitely.

Can I use trading losses against rental income?

If you make a loss in your business trade you can use this loss against your Irish rental income but only in the current year.

How do I pay taxes if I’m not a resident of the state?

An annual Income Tax return (Form 11) declaring the Irish rental income should be filed with the Revenue by 31 October the following year in which the rental income was earned. For example, the 2024 Income Tax return is due by 31 October 2025. Any Income Tax due can be paid when filing the tax return.

What is Non-Resident Landlord Withholding Tax (NLWT)?

There is also an obligation for the tenant or collection agent to withhold 20% of the gross rental income and pay this over to the Revenue every month unless a “chargeable” collection agent is appointed.

What is a collection agent?

A collection agent will take care of the withholding tax obligations for the landlord by filing a Rental Notification (RN) and paying 20% of the gross rental income to the Revenue each month. A collection agent can be any person who is a resident of Ireland.  Appointed collection agents are usually estate agents or solicitors.  If a collection agent is not appointed, the tenant is responsible for deducting the 20% withholding tax and paying this to the Revenue each month.

Does withholding tax apply if I appoint a “chargeable” collection agent?

If a non-resident landlord appoints a “chargeable” collection agent, then no withholding tax needs to be deducted and paid over to the Revenue each month. The NLWT system is not required in these circumstances. A chargeable collection agent must hold a National Tax Advisor Identity Number (TAIN).  We can provide details for a tax adviser that provides “chargeable” collection agent services and tax return preparation services.

For expert advice and support with managing and letting out your property, get in touch with Brock Delappe estate agents today.