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tax credits

  • 16-12-2019 2:13am
    #1
    beaufoy
    Registered Users, Registered Users 2 Posts: 325 ✭✭


    At this present time all my income comes from renting out a few apts i have. Said income is taxed and i receive a tax credit which means my tax liabilities are quite low. If I get a paye job will i have to pay tax on a 100% of paye income, or will i get a more generous tax credit


Comments

  • #2
    treenytru
    Registered Users, Registered Users 2 Posts: 104 ✭✭treenytru


    Trainee accountant here so if anyone would like to add anything further jump in!

    Tax credits are based on the particulars of your employment - PAYE, self employed, company director etc and your personal circumstances i.e married/single/ over 65 / incapacitated child/ single parent etc.

    Please check the personal credits here to make sure you are accessing all you are entitled to:https://www.revenue.ie/en/jobs-and-pensions/tax-credits/index.aspx

    The only credit that should change by moving to PAYE is that now, as you rely solely on rental income you are deemed self employed and so you are receiving an earned income credit of 20% of your rental profits (income - expenses) as a credit . The maximum amount of this credit is 1150euro

    Employed individuals earn a PAYE credit of 20% of income (- deductions e.g private pension contributions) with a maximum amount of this credit is 1650 euro.

    In short, you get a bigger credit for being employed rather than self employed. Please note if you are employed and getting rental income you do not get the 2 credits (earned credit of max 1150 + max 1650).

    If 20% of your rental profits + 20% of your PAYE income = > 1650 euro , your credit is restricted to 1650 so this is the maximum credit you will receive.

    I hope this helps in your understanding.

    Reducing your tax liability really depends on making sure you are claiming for all the expenses on your rental properties , applying for all the credits you are entitled to and maximising all deductions available to you


  • #3
    Turtwig
    Registered Users, Registered Users 2 Posts: 26,578 ✭✭✭✭Turtwig


    You are not entitled to the earned income credit for rental income.

    Op,
    If you take up a PAYE employment you will be entitled to the employee tax credit. This amount will be the minimum of either, 20% your taxable PAYE income, or €1,650. In effect you could earn up to €8,250 a year from employments without paying any income tax on it. It would still be subject to USC and PRSI.


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