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Tax query

  • 21-01-2022 3:58pm
    #1
    Registered Users Posts: 15


    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.



Answers

  • Registered Users Posts: 3,920 ✭✭✭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 :)



  • Registered Users Posts: 15 Camps


    Thanks 3DataModem, appreciate the reply and information.



  • Registered Users Posts: 607 ✭✭✭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.



  • Registered Users Posts: 15 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.



  • Registered Users Posts: 607 ✭✭✭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



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  • Registered Users Posts: 607 ✭✭✭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.



  • Moderators, Business & Finance Moderators Posts: 17,590 Mod ✭✭✭✭Henry Ford III


    Painting is fully deductable against rental income immediately.



  • Registered Users Posts: 6,727 ✭✭✭ebbsy




  • Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators, Social & Fun Moderators Posts: 22,269 CMod ✭✭✭✭Pawwed Rig


    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



  • Registered Users Posts: 15 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.



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  • Registered Users Posts: 9,991 ✭✭✭Caranica


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



  • Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators, Social & Fun Moderators Posts: 22,269 CMod ✭✭✭✭Pawwed Rig


    Exactly. Have the tenant move in and then paint



  • Registered Users Posts: 607 ✭✭✭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).



  • Registered Users Posts: 607 ✭✭✭MakersMark


    Excellent point.

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



  • Registered Users Posts: 15 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?



  • Registered Users Posts: 15 Camps


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



  • Registered Users Posts: 364 ✭✭Diairist


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



  • Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators, Social & Fun Moderators Posts: 22,269 CMod ✭✭✭✭Pawwed Rig


    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



  • Registered Users Posts: 15 Camps


    No, I won't be living here.



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