Tax query

Camps

Hi,

If renting out your home do all expenses count against your tax bill or is it 40% of expenses (based on tax band)?

Example, if I have the house painted and it costs me €1,000 will the full amount be tax deductible or €400.

Thanks.

3DataModem

If it is an RTB rental, then full amount is allowable against income. Only expense that is not fully deductible is mortgage interest.

Based on the way you asked the question, you may confuse things.

The expense is deducted against INCOME not TAX.

For example;

Assuming rental income = 5000 and your tax rate is 50%, you would normally pay 2500 tax.

Expense: 1000 is deducted from rental income, so taxable income is 5000-1000 = 4000 so you pay 2000 tax.

You don't just take the 1000 off the 2500 tax liability :)

Camps

Thanks 3DataModem, appreciate the reply and information.

MakersMark

You should be aware that capital spends (new fridge, furniture etc) is not all tax deducted at once.

It's amortised 12.5% a year for 8 years.

So, you could deducted 125 a year for 8 years on a 1000 euro sofa.

Repairs are deductible in one go.

Not sure if painting a house would be classed as a repair. Might be.

Camps

I did not realise that you had to spread that type of spending over several years. Do you know if there's guidance on how to classify your spend?

Thanks for the advice.

MakersMark

Best thing us to meet/speak with an accountant.

Revenue have info here:

https://www.revenue.ie/en/property/rental-income/irish-rental-income/index.aspx

MakersMark

By the way...you say you are renting out your home?

Will you be getting house sharing? If you are then different and better tax rules apply.... search for rent a room relief.

Henry Ford III

Painting is fully deductable against rental income immediately.

ebbsy

https://www.boards.ie/discussion/comment/118516065#Comment_118516065

Best advice given on here.

Pawwed Rig

https://www.boards.ie/discussion/comment/118513549#Comment_118513549

Mortgage interest is fully deductible

I am assuming the OP us not living in the house but the way he phrases his post it is not that clear

Camps

To clarify - I won't be living in the house. Moving out in the next few weeks and plan to have someone move in shortly afterwards.

Caranica

https://www.boards.ie/discussion/comment/118516160#Comment_118516160

If you're painting before you let that is not tax deductible. Pre-letting renovations aren't deductible (but are between lettings).

Pawwed Rig

https://www.boards.ie/discussion/comment/118516341#Comment_118516341

Exactly. Have the tenant move in and then paint

MakersMark

Op...do you have a mortgage on the property?

If so, remember that only the interest portion of the payment is deductible.

A lot of new landlords often mistakenly believe that they are taxed on net rental income (rent - mortgage payment).

MakersMark

https://www.boards.ie/discussion/comment/118516619#Comment_118516619

Excellent point.

Another example of how landlords are unfairly taxed compared to other businesses.

Camps

I do have a mortgage on it and am aware it's only mortgage interest which can be deducted. I have a tracker which is great in one way but prob not when it comes to deducting interest paid.

Do you know if using your property as a rental rather than a.primary residence can change the terms of a mortgage?

Camps

Is that standard practice? I'm fine with doing it but wondering if the tenants would be a bit put out by it.

Diairist

I see " If renting out your home " - this isn't the lodger upstairs? This is Case V income, you don't live there?

Pawwed Rig

https://www.boards.ie/discussion/comment/118516702#Comment_118516702

Meh just tell them it is part of the deal. It is a landlords market at the moment so tenants will put up with a bit of minor short term disruption to get a good property

Camps

No, I won't be living here.