Tax on Rental Income

Justin1982

Hi,

Am I right in thinking that I can earn EUR 10,000 from rental on my primary residence over a period of one year without having to pay tax on it?

Am I also right in presuming that my earnings from employment have no bearing on the tax I pay on rental income on the same primary residence?

I earn less than EUR 60,000 a year on my PAYE salary. I have a mortgage of about 700 euro on the house I pay the mortgage on and live in.

Thanks in advance!
Justin

gerrybbadd

Justin1982 wrote: »

Hi,

Am I right in thinking that I can earn EUR 10,000 from rental on my primary residence over a period of one year without having to pay tax on it?

Am I also right in presuming that my earnings from employment have no bearing on the tax I pay on rental income on the same primary residence?

I earn less than EUR 60,000 a year on my PAYE salary. I have a mortgage of about 700 euro on the house I pay the mortgage on and live in.

Thanks in advance!
Justin

Are you renting a room out in the same house you are living in? Then it's €12k from this year tax free. And your employment income has no bearing.

Income, although exempt, still has to be declared via Form 12.

filbert the fox

Justin1982 wrote: »

Hi,

Am I right in thinking that I can earn EUR 10,000 from rental on my primary residence over a period of one year without having to pay tax on it?

Am I also right in presuming that my earnings from employment have no bearing on the tax I pay on rental income on the same primary residence?

I earn less than EUR 60,000 a year on my PAYE salary. I have a mortgage of about 700 euro on the house I pay the mortgage on and live in.

Thanks in advance!
Justin

you must live there also - the scheme is Rent a room in your home.

Justin1982

Thanks. Its just so frustrated trying to determine what tax you pay.

I read a famous Irish financial advice book recently which stated that the first EUR 10,000 is tax free prior to 2015 but you pay tax on anything you earn over that which would make sense kind of.

I double checked it on the revenue.ie website and they give examples which indicate that if you earn less than EUR 10,000 you dont pay tax on it but if you earn EUR 11,000 then you become liable for tax on the full EUR 11,000.

So I rang Revenue to confirm how it worked. The woman who answered the phone told me that you do pay tax on any earnings from rental income. I was really confused and told her I didnt think that was the case and that there was a threshold of EUR 10,000 over the last few years. She kept telling me that all earnings from rental income had to be declared and were liable for tax even if under EUR 10,000. So I read from the revenue website word for word and she still disagreed with me. She also kept trying to get my PPS number off me and find out how many people were living in the house and how much I earned. I kept telling her I just rang to confirm what the rules were. Before I could ask her to speak to someone who knew a little more about this than she did, she hung up the phone on me.

Seriously frustrating.

filbert the fox

Justin1982 wrote: »

Thanks. Its just so frustrated trying to determine what tax you pay.

I read a famous Irish financial advice book recently which stated that the first EUR 10,000 is tax free prior to 2015 but you pay tax on anything you earn over that which would make sense kind of.

I double checked it on the revenue.ie website and they give examples which indicate that if you earn less than EUR 10,000 you dont pay tax on it but if you earn EUR 11,000 then you become liable for tax on the full EUR 11,000.

So I rang Revenue to confirm how it worked. The woman who answered the phone told me that you do pay tax on any earnings from rental income. I was really confused and told her I didnt think that was the case and that there was a threshold of EUR 10,000 over the last few years. She kept telling me that all earnings from rental income had to be declared and were liable for tax even if under EUR 10,000. So I read from the revenue website word for word and she still disagreed with me. She also kept trying to get my PPS number off me and find out how many people were living in the house and how much I earned. I kept telling her I just rang to confirm what the rules were. Before I could ask her to speak to someone who knew a little more about this than she did, she hung up the phone on me.

Seriously frustrating.

To Clarify:

1. if you rent out your house as a unit to someone else/ group etc and don't live there you pay tax on rental income at about 50%.
2. if you live there and Rent a room under the scheme you can earn up to €12000 tax free provided you declare it. Simples

relax carry on

Justin1982 wrote: »

Thanks. Its just so frustrated trying to determine what tax you pay.

I read a famous Irish financial advice book recently which stated that the first EUR 10,000 is tax free prior to 2015 but you pay tax on anything you earn over that which would make sense kind of.

I double checked it on the revenue.ie website and they give examples which indicate that if you earn less than EUR 10,000 you dont pay tax on it but if you earn EUR 11,000 then you become liable for tax on the full EUR 11,000.

So I rang Revenue to confirm how it worked. The woman who answered the phone told me that you do pay tax on any earnings from rental income. I was really confused and told her I didnt think that was the case and that there was a threshold of EUR 10,000 over the last few years. She kept telling me that all earnings from rental income had to be declared and were liable for tax even if under EUR 10,000. So I read from the revenue website word for word and she still disagreed with me. She also kept trying to get my PPS number off me and find out how many people were living in the house and how much I earned. I kept telling her I just rang to confirm what the rules were. Before I could ask her to speak to someone who knew a little more about this than she did, she hung up the phone on me.

Seriously frustrating.

You haven't clarified, are you trying to use the rent a room scheme or are you talking about normal rental income. There are differences. Link below.

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

Justin1982

relax carry on wrote: »

You haven't clarified, are you trying to use the rent a room scheme or are you talking about normal rental income. There are differences. Link below.

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

Its my primary residence in which I live. I have a spare bedroom in the house.

relax carry on

Justin1982 wrote: »

Its my primary residence in which I live. I have a spare bedroom in the house.

Then it's the rent a room scheme you are looking for so long as you meet the conditions applicable to it. It allows you the earn up to 12000 from renting a room(s) in your PPR. The income must be declared for the exemption to apply. You declare it by filling a tax return each year, either a form 12 or Form 11 whichever is applicable to you. The link I posted earlier has more information on it.

Justin1982

Hmmm. So for past 5 years do I get punished if I declare income now even though it's a negligible amount and below the threshold?

relax carry on

Justin1982 wrote: »

Hmmm. So for past 5 years do I get punished if I declare income now even though it's a negligible amount and below the threshold?

Can't think of any penalty that would apply. Note the 12000 figure applies from 2015 onwards. For prior years it was 10000.

filbert the fox

Justin1982 wrote: »

Hmmm. So for past 5 years do I get punished if I declare income now even though it's a negligible amount and below the threshold?

Just declare last year's for now. You don't owe anything for letting out a single room because if you do I'm straight off to do up the boxroom and Attila the Hun can stay for that sort of cash!