Simple personal tax question

aeolian sky

I live with my father in his house. I have an apartment which I rent out.I don't work but I don't receive any social welfare or payments from the government whatsoever. I still pay a mortgage on the apartment. My question is do I have to pay tax on the rental income and is there a threshold like there is with earned income below which I do not have to pay tax

relax carry on

aeolian sky wrote: »

I live with my father in his house. I have an apartment which I rent out.I don't work but I don't receive any social welfare or payments from the government whatsoever. I still pay a mortgage on the apartment. My question is do I have to pay tax on the rental income and is there a threshold like there is with earned income below which I do not have to pay tax

The rental income must be declared. It depends on how much taxable income you have from your apartment whether or not you pay income tax. There are no tax free thresholds however the system we have which is rate bands and tax credits can to some degree act like thresholds.

To note your mortgage payment is irrelevant for your tax computation. The interest portion of it can be deducted from your gross rental income in arriving at your taxable income.

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

How much gross rental income are you in receipt of and how long is the apartment rented for.

aeolian sky

Thank you for your reply. The apartment has been rented out since September 2016. The rental income is 1500 PCM, the mortgage is 320 PCM and the maintenance is 160 PCM. What is my gross income and at what rate will I pay tax on it

relax carry on

aeolian sky wrote: »

Thank you for your reply. The apartment has been rented out since September 2016. The rental income is 1500 PCM, the mortgage is 320 PCM and the maintenance is 160 PCM. What is my gross income and at what rate will I pay tax on it

For 2016 it's 1500 * 4. That's 6000 which is your gross for the 2016 tax year. Less allowable deductions, ( the applicable mortgage interest for those 4 months, your maintenance expenses etc) You also most likely have capital allowances for 2016 also in relation to the furniture in the apt.

Once all allowable deductions and capital allowances are applied you are left with your net taxable income. By applying the normal standard rate band and single persons tax credits to that net taxable income, you shouldn't have any liability in 2016.

2017 may be a different story as you are into a full tax year at 1500 * 12 which is 18000 gross. You can apply 12 months worth of applicable expenses against it to come up with your net taxable income. You may have a bit of a liability​ in 2017 depending on the level of expenses.

In any case, you need to register for income tax with Revenue to declare your rental income. No harm in talking to an accountant for an hour to get your head around it all. Take your time reading through the guide to rental income and have a chat with an accountant.

aeolian sky

Thank you for you advice.May I just ask one last question.What is the basic rate of tax on rental income ?

relax carry on

aeolian sky wrote: »

Thank you for you advice.May I just ask one last question.What is the basic rate of tax on rental income ?

There isn't a special rate for rental income on a personal basis. It's treated the same as other income. Any taxable income up to 33800 euro is taxed at the standard rate and anything above that is at the marginal rate. For example if your taxable income turns out to be 8000 for 2017 then income tax is due on it at 20%. So you would have a gross liability of 1600 on that taxable income. However you are then able to use your personal tax credit of 1650 euro to reduce that down to zero.