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Tax on rental income

  • 15-07-2012 9:49pm
    #1
    Registered Users, Registered Users 2 Posts: 112 ✭✭


    I am paying income tax at the higher marginal rate and i am looking to rent my apartment.
    If I get €750/month what tax would i be paying on this and what expenses can i write off against the tax to reduce it?
    Thanks in advance


Comments

  • Registered Users, Registered Users 2 Posts: 269 ✭✭Bobby1984


    As you are on the high rate of tax, you would be paying approx 50% tax (paye prsi and USC) on the rental income.

    The main expense most people have is mortgage interest on a loan to buy the property. You can deduct 75% of the interest payments and any other rental expenses from the rental income received before multiplying by 50% to get the tax due.


    See attached for more details:

    http://www.revenue.ie/en/tax/it/rental-income.html


  • Registered Users, Registered Users 2 Posts: 112 ✭✭brianb10


    Thanks Bobby.
    Is this a correct calculation

    Rent 750 x 12mths = €9,000

    LESS
    Mortgage interest (75% of €13,300) = €9975

    Does that mean i have a rental loss and don't have to pay tax on the rental income?


  • Registered Users, Registered Users 2 Posts: 5,006 ✭✭✭Shane732


    brianb10 wrote: »
    Thanks Bobby.
    Is this a correct calculation

    Rent 750 x 12mths = €9,000

    LESS
    Mortgage interest (75% of €13,300) = €9975

    Does that mean i have a rental loss and don't have to pay tax on the rental income?

    In a word yes.


  • Registered Users, Registered Users 2 Posts: 269 ✭✭Bobby1984


    You need to make sure that you have registered the tenancy with the PRTB. Otherwise none of the mortgage interest is allowed against the rental income.

    Rent 750 x 12mths = €9,000

    Taxed at 50% = €4,500

    I do this to show you the importance of registering with the PRTB. I think its €100 but its €200 if you are back dating the tenancy.

    Don't forget that even though you do not have to pay tax, you must still file a tax return. The good news is that the rental loss of €975 in your calculations would be available to carry forward and offset against rental profits next year


  • Moderators, Science, Health & Environment Moderators Posts: 23,260 Mod ✭✭✭✭godtabh


    Bobby1984 wrote: »
    You need to make sure that you have registered the tenancy with the PRTB. Otherwise none of the mortgage interest is allowed against the rental income.

    Rent 750 x 12mths = €9,000

    Taxed at 50% = €4,500

    I do this to show you the importance of registering with the PRTB. I think its €100 but its €200 if you are back dating the tenancy.

    Don't forget that even though you do not have to pay tax, you must still file a tax return. The good news is that the rental loss of €975 in your calculations would be available to carry forward and offset against rental profits next year

    You don't need to register with pRTB to make a tax return. That's separate. Unless you can prove otherwise


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  • Registered Users, Registered Users 2 Posts: 112 ✭✭brianb10


    If i rent my apartment and rent out a bigger house to live in is it possible to recieve 30% mortgage relief on my mortgage as well as claiming the mortgage interest as an expense on rental income?
    Can you do both?

    I think i messed up my calculation above.
    The 13,300 was the total interest before 30% relief.
    Am i right in saying
    30% of 13,300 = 3990
    therefore actual interest paid = 9310
    75% of 9310 = 6982 which is the amount to take off the rental income as an expense?

    Hope that makes sense and I'm not rambling too much!


  • Registered Users, Registered Users 2 Posts: 4,686 ✭✭✭barneystinson


    godtabh wrote: »
    You don't need to register with pRTB to make a tax return. That's separate. Unless you can prove otherwise

    I think you've misunderstood what the prvious poster said - he's telling the OP that he has to file a tax return either way, but unless he's registered the tenancy with the PRTB then he cannot claim an interest expense against the rental income.

    Unless you can prove otherwise... (saucer of milk!) ;)


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