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How much tax will I pay? Rented property tax question

  • 23-11-2013 7:16pm
    #1
    The Ayatolla
    Registered Users, Registered Users 2 Posts: 4,166 ✭✭✭


    I'm a fully emplyed single male earning approx 28k per year.

    I have around 40k in savings, and I've noticed a property come up for sale that I could buy for cash. No mortgage needed.

    I was investigating the property and it earns around 650euros per month in rent.

    If i was to buy this house and rent it out, what am I liable to pay tax-wise?


Comments

  • #2
    Thoie
    Registered Users, Registered Users 2 Posts: 6,344 ✭✭✭Thoie


    The income just adds on to your "normal" income, and you pay tax on the whole lot. The rental income would probably put you into the higher tax brackets. There is tax relief on certain things to do with the rental.

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


  • #3
    The Ayatolla
    Registered Users, Registered Users 2 Posts: 4,166 ✭✭✭The Ayatolla


    Cheers!

    I'll use a tax calculator and find out how much i'd pay then.

    Is USC calculated based on the other earnings from rent?


  • #4
    Thoie
    Registered Users, Registered Users 2 Posts: 6,344 ✭✭✭Thoie


    I think USC is based on all income. Rough estimate is that you'd come out a max of €400 a month better off, but out of that you'd need to pay property tax, maintenance, repairs, service charges (bins, maybe water). If you say all that stuff takes up €100 a month, and you saved the other €300 each month, it would take you 10-12 years to build back up the €40k savings again.

    It wouldn't particularly appeal to me, I'd probably go for a "safer" investment of the money that requires less work, but I'm pretty risk averse.


  • #5
    The Ayatolla
    Registered Users, Registered Users 2 Posts: 4,166 ✭✭✭The Ayatolla


    If I was to mortgage the 40k then, would I have to pay tax on the rent I receive?


  • #6
    relax carry on
    Registered Users, Registered Users 2 Posts: 4,123 ✭✭✭relax carry on


    The Ayatolla wrote: »
    If I was to mortgage the 40k then, would I have to pay tax on the rent I receive?

    It doesn't work that way. The biggest expense landlords can offset against their rental income in computing their tax liability is 75% of the mortgage interest only.

    http://www.revenue.ie/en/tax/it/leaflets/it70.html


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  • #7
    MicktheMan
    Registered Users, Registered Users 2 Posts: 2,908 ✭✭✭MicktheMan


    The Ayatolla wrote: »
    I have around 40k in savings, and I've noticed a property come up for sale that I could buy for cash. No mortgage needed.

    I was investigating the property and it earns around 650euros per month in rent.

    Going off topic a bit but wow nearly 20% gross yield, are you sure of your numbers?


  • #8
    The Ayatolla
    Registered Users, Registered Users 2 Posts: 4,166 ✭✭✭The Ayatolla


    MicktheMan wrote: »
    Going off topic a bit but wow nearly 20% gross yield, are you sure of your numbers?

    Yep. Rent is def between 600-650 according to current tenants and landlord.


  • #9
    Citizenpain
    Registered Users, Registered Users 2 Posts: 2,015 ✭✭✭Citizenpain


    Your taxable income is your rent less

    Qualifying mortgage interest (75% if PRTB Registered)
    Management fees
    Advertising expenses
    Estate agent fees
    Insurance premiums
    PRTB registration fee
    Mortgage protection policy premium
    Accountants fees for preparing rental accounts
    Refuse and other service charges – if paid by the landlord
    Cost of repairs and maintenance
    capital allowances

    If after this your total income is less than 32800 you'll pay tax at 20% - anything over is at 41%

    USC is 7%

    PRSI is 4%


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