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rental income

  • 11-07-2014 12:22pm
    #1
    feenee2
    Registered Users, Registered Users 2 Posts: 1 ✭


    Hi all,my wife and i are currently looking to move house,we currently live in the city centre and we just want peace and quite now...my wife owns the apartment with no mortage,we could rent it for 1200pm!!can anyone advise us on how much taxes etc we would have to pay per year.it currently has a market value of €200000.are we better to sell and have no mortage or rent it and get a mortage of €200000.thanks for any advice


Comments

  • #2
    srsly78
    Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    You pay normal income tax on it, just like anything else. For specifics about allowable expenses etc talk to an accountant. Things like mortgage interest relief are about to change, so definitely get proper advice.


  • #3
    walshb
    Registered Users, Registered Users 2 Posts: 57,368 ✭✭✭✭walshb


    The amount of rent collected in a year is added to your income and it is taxed on the total, income tax and USC applied. At the moment you can claim back 75 percent of any interest paid on your mortgage. In your case this is 0.

    Eg: Rental income of 10 k - 3 k for expenses is 7k to be added to your other income for the year in question. That 7 k is subject to income tax and USC.

    PRTB fee can also be claimed as an expense.

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


  • #4
    walshb
    Registered Users, Registered Users 2 Posts: 57,368 ✭✭✭✭walshb


    Is it worth getting an accountant to look at your rental income if it's not all that much, say below 7 k when expenses are considered? Apart from the expenses that you can claim for that revenue list, are there many hidden expenses that an accountant could find for you?


  • #5
    Feed me Seymour
    Closed Accounts Posts: 36 ✭Feed me Seymour


    walshb wrote: »
    At the moment you can claim back 75 percent of any interest paid on your mortgage. In your case this is 0.

    ]


    As far as I'm aware, its 75% of interest charged, not paid.


  • #6
    Skybox
    Registered Users, Registered Users 2 Posts: 109 ✭✭Skybox


    walshb wrote: »
    Is it worth getting an accountant to look at your rental income if it's not all that much, say below 7 k when expenses are considered? Apart from the expenses that you can claim for that revenue list, are there many hidden expenses that an accountant could find for you?

    It's not necessarily a case of the accountant finding hidden expenses in relation to just rental income. If the accountant is preparing your income tax return, he/she will look at your overall circumstances and can offer advice in relation to pensions/investments, etc that may reduce your overall tax bill.

    For an accountant to solely prepare your income tax return, you would not be looking at a huge cost, couple of hundred euro, maybe. Some of the forms can be quite tricky also


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  • #7
    walshb
    Registered Users, Registered Users 2 Posts: 57,368 ✭✭✭✭walshb


    Feed me Seymour wrote: »
    As far as I'm aware, its 75% of interest charged, not paid.

    Not sure I'm with you. I believe it to be the total amount of interest you paid on your mortgage loan in a given year x .75.


  • #8
    Feed me Seymour
    Closed Accounts Posts: 36 ✭Feed me Seymour


    walshb wrote: »
    Not sure I'm with you. I believe it to be the total amount of interest you paid on your mortgage loan in a given year x .75.

    You can get relief (deduction) on 75% of the interest accruing. Not paid. Interest will keep accruing, but it actually doesnt have to be paid to use it as a deduction. Ie, last year I was charged 12000 in interest. I can use 75% of same as a a deduction against 10000 Rental Income received. I may not have paid the 12000 interest. Obviously the banks wouldnt be happy.


  • #9
    filbert the fox
    Registered Users, Registered Users 2 Posts: 809 ✭✭✭filbert the fox


    feenee2 wrote: »
    Hi all,my wife and i are currently looking to move house,we currently live in the city centre and we just want peace and quite now...my wife owns the apartment with no mortage,we could rent it for 1200pm!!can anyone advise us on how much taxes etc we would have to pay per year.it currently has a market value of €200000.are we better to sell and have no mortage or rent it and get a mortage of €200000.thanks for any advice

    You use the words peace and quite(sic) and rent apartment in the same sentence. ????

    It looks like hobson's choice.
    1. you say your wife owns the apartment. Do you live there? If this is not your Principal Private Residence you may have a Capital Gains Tax liability.
    2. The most feared text to receive is the one that has the tenant's contact name and/or number on it.
    3. Are you landlord material? Vetting tenants is a minefield and stressful.
    You'll pay income tax, PRSI, USC, Property Tax, PRTB, and all the other expenses associated with such a project - maintenance, fixtures, insurance, repairs etc. etc. Some of these can be offset against tax but capital allowances for example are spread over 8 years.
    4. I'd take the money and run...Good luck


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