Tax on Rental Income

Wexford96

Could anyone please help me with my query.

If a property produces rental income of 2000 EU monthly & the mortgage repayment is 1990 EU monthly, how much tax will need to be paid on each months rental income?

Thanks.

barneystinson

Wexford96 wrote: »

Could anyone please help me with my query.

If a property produces rental income of 2000 EU monthly & the mortgage repayment is 1990 EU monthly, how much tax will need to be paid on each months rental income?

Thanks.

Depends, on how much the profit is.

relax carry on

Wexford96 wrote: »

Could anyone please help me with my query.

If a property produces rental income of 2000 EU monthly & the mortgage repayment is 1990 EU monthly, how much tax will need to be paid on each months rental income?

Thanks.

Everyone's tax situation is unique to them so it depends on a lot of things. Rental income minus allowable expenses (advertising, 75% mortgage interest only, accounting fees etc) taxed at your marginal rate.

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

Bobby1984

relax carry on wrote: »

Everyone's tax situation is unique to them so it depends on a lot of things. Rental income minus allowable expenses (advertising, 75% mortgage interest only, accounting fees etc) taxed at your marginal rate.

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

That 75% of mortgage interest can only be deducted from rental income if you have registered the tenancy with the PRTB.

And the amount of tax payable depends on other things like what other income you have and how much it is along with the amount of tax credits available and the rate band for income tax

Wexford96

Bobby1984 wrote: »

That 75% of mortgage interest can only be deducted from rental income if you have registered the tenancy with the PRTB.

And the amount of tax payable depends on other things like what other income you have and how much it is along with the amount of tax credits available and the rate band for income tax

Thanks Bobby.
Do you think I need the services of an accountant or can I sort this out myself?

Bobby1984

Wexford96 wrote: »

Thanks Bobby.
Do you think I need the services of an accountant or can I sort this out myself?

Where you have a rental property you are probably best sitting down and talking to an accountant. It is best to spend a few hundred euro and get it done right. Doing it wrong can be a lot more expensive when you have an audit and you have to pay interest and penalties on top of the tax you might owe.

filbert the fox

... if you have registered the tenancy with the PRTB.

AFAIK that is a requirement of every tenancy. So when you have registered....

Bobby1984

filbert the fox wrote: »

... if you have registered the tenancy with the PRTB.

AFAIK that is a requirement of every tenancy. So when you have registered....

Right lets be pedantic!!

IF the property is a business property, it doesn't need to be registered with the PRTB

IF the landlord resides in the property with the tenants, it doesn't need to be registered with the PRTB

There are a number of other exemptions - see http://www.prtb.ie/landlords/helpful-info-documents

Basically there is not enough information from the OP, hence the advice that he/she should talk to an accountant

TMC99

I have a similar question - if I can use the OPs figures and add
Rental Income = 2000
Mortgage = 1990
Of which interest = 200

Assuming I have no outgoings/expenses in the month, my profit = (2000-150) = 1850
Lets say my tax rate = 50%, so amount to revenue = 925
So in a given month I pay 2915 (mortgage + tax) but on an income of 2000, effectively a loss of 915 per month or over 10K PA.

Is that correct?

barneystinson

TMC99 wrote: »

I have a similar question - if I can use the OPs figures and add
Rental Income = 2000
Mortgage = 1990
Of which interest = 200

Assuming I have no outgoings/expenses in the month, my profit = (2000-150) = 1850
Lets say my tax rate = 50%, so amount to revenue = 925
So in a given month I pay 2915 (mortgage + tax) but on an income of 2000, effectively a loss of 915 per month or over 10K PA.

Is that correct?

It's correct based on your figures, but the vast majority of mortgage payments (apart from those whose term is in the last few years) entail more interest than capital, in fact there are plenty of people paying interest only at the moment. so your example is unrealistic in the vast majority of cases.

filbert the fox

TMC99 wrote: »

I have a similar question - if I can use the OPs figures and add
Rental Income = 2000
Mortgage = 1990
Of which interest = 200

Assuming I have no outgoings/expenses in the month, my profit = (2000-150) = 1850
Lets say my tax rate = 50%, so amount to revenue = 925
So in a given month I pay 2915 (mortgage + tax) but on an income of 2000, effectively a loss of 915 per month or over 10K PA.

Is that correct?

Surely you have expenses associated with the letting. Taking time out to inspect the property, repairs, maintenance, capital expenditure, management fees, prtb, insurance(it is insured isn't it) etc. should reduce your tax bill. You're entitled to legitimate expenditure associated with the letting.... you're being hammered by Property Tax, reduced interest allowance, and if previously let NPPR, household charge, Prtb, etc. Claw some back!

TMC99

Thanks to both of you for your responses. My figures are not 100% accurate - but not too far out. Mortgages are approaching their end of term (5 years left) and are on tracker rates so interest is very small as a % of the capital repayments. I do have some other expenses to add in (insurance, maintenance, mgmt fees) but comparatively small in the context of the "profit" I am apparently making As the interest amount decreased in the last few years I only started appreciating the future tax consequences - essentially costing me money until such time as the mortgages are paid off.

barneystinson

TMC99 wrote: »

Thanks to both of you for your responses. My figures are not 100% accurate - but not too far out. Mortgages are approaching their end of term (5 years left) and are on tracker rates so interest is very small as a % of the capital repayments. I do have some other expenses to add in (insurance, maintenance, mgmt fees) but comparatively small in the context of the "profit" I am apparently making As the interest amount decreased in the last few years I only started appreciating the future tax consequences - essentially costing me money until such time as the mortgages are paid off.

Have you paid the NPPR?? You're storing up a whole world of hurt for yourself if you haven't.

TMC99

I'm fully up to date with NPPR, HC, LPT - I have not claimed any of these as expenses however as they are not allowable I believe.

filbert the fox

The jury is still out on property tax and everything else.