Whats is the tax on rental income?

lokoman

Hi guys can some one give me a percentage value for the rental tax income in ireland? is tax charged at 20% or is it charged as 42%?thanks

Scruff

are you talking about being an owner occupier or buy to rent?

If its buy to rent its (from [linkd=askaboutmoney]http://www.askaboutmoney.com/guide/ch14.htm[/linkd])

[FONT=Verdana, Arial, Helvetica, sans-serif]BUT BORROWING TO INVEST IN PROPERTY
INCREASES THE RISK[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]If you buy a property without the need to borrow, you will be able to handle slumps in property prices or periods without a tenant. But if you borrow to buy a property, you will be badly affected by such slumps. Let's say you buy a property for £100k with a mortgage of £80k. A 30% price crash would reduce the property to a value below the size of your mortgage. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]How likely is such a crash ? There must be a significant risk of a slowdown in the short term. And there must be some risk of a crash ![/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]And don't forget the property specific risk. If you might buy the wrong property in the wrong area and get a bad tenant, you might lose money even if the general property market increases. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]What stamp duty do I pay on buying a house as an investment?[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]The following rates apply to investors in new or second-hand properties:[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]
[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Up to €127k[/FONT] [FONT=Verdana, Arial, Helvetica, sans-serif]0%[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]€127k to €190.5k [/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]3%[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]€190.5k to €254k [/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]4%[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]€254k to €317.5k [/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]5%[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]€317.5k to €381k [/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]6%[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]€381k to €635k [/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]7.5%[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Over €635k [/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]9%[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]What Income Tax and Capital Gains Tax do I pay?[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]You will pay income tax on your rental income after mortgage interest and expenses at your top rate - 20% or 42%.
You will pay also pay prsi at 5%.[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]When you sell the property, you will pay CGT at 20% on the increase in value after allowing for inflation.

[/FONT]

The Troll

It depends how much you are earning from your day job. if you break the 20% threshold in your normal job then you'll pay tax on the rental income at 42%. if not you'll pay 20%. If you don't but your rental income puts you through the threshold then you pay 20% and 42%(hope that isn't too confusing) - basiclaly you pay 20% on everything under the threshold and 42% on everything over.

lokoman

hi there what is the 20% threshold in euros. is it about 30000 per annum?

CCOVICH

It's €29,400 for a single person.

ck1

Don't forget you also pay PRSI on taxable rent at 5%

PJG

Is all the rent taxable or is it the balance between the rent less the mortage and expenses ?

RainyDay

PJG wrote:

Is all the rent taxable or is it the balance between the rent less the mortage and expenses ?

The profit is taxable not the full rent. However, only the interest part of your mortgage repayment can be claimed as an expense, not the capital part.

CHeck the FAQ's in the Askaboutmoney.com Property INvestment Forum for more details.

PJG

rainyday, thanks for the info and the link.

beanie2012

we are renting property for €950 per month, and one of us is on the higher bracket tax, how much will we owe? also is charitable donations taken off the tax bill?

Liam D Ferguson

beanie2012 wrote: »

we are renting property for €950 per month, and one of us is on the higher bracket tax, how much will we owe? also is charitable donations taken off the tax bill?

Do you mean that own a property and someone is renting it from you for €950 per month?

Rental income, less allowable deductions, is taxable as if it's additional income. See http://www.revenue.ie/en/tax/it/leaflets/it70.html

Donations to registered charities are tax-deductible from your income.

beanie2012

sorry should have been more specific, yes we own a second property, which we have rented out, and just concerned of the pending tax bill.

can the charitable donations tax be claimed back for three year period? have only just discovered that was possible.

Geuze

Rental profits are simply added to any other income and the whole lot is taxed as normal, more or less.

Geuze

http://www.revenue.ie/en/tax/it/rental-income.html

Revenue doc on rental income.

beanie2012

thanks for that..will have to study it..:mad:

Ally Dick

beanie2012 wrote: »

can the charitable donations tax be claimed back for three year period? have only just discovered that was possible.

You can only claim tax relief on charitable donations to a charity in excess of €250 if you are self employed. Otherwise you can't claim it.

Liam D Ferguson

Ally Dick wrote: »

You can only claim tax relief on charitable donations to a charity in excess of €250 if you are self employed. Otherwise you can't claim it.

Yes - I should have included that - if you're a PAYE employee, the charity can claim the relief.

beanie2012

well I am not self employed, however as we own a second property, we were told the charities we subscribe to, are unable to claim the tax back, on which I am disappointed. we were told that WE can claim when submitting are tax forms, so now I am really confused...

barneystinson

beanie2012 wrote: »

well I am not self employed, however as we own a second property, we were told the charities we subscribe to, are unable to claim the tax back, on which I am disappointed. we were told that WE can claim when submitting are tax forms, so now I am really confused...

I think the cause of confusion here is the use of the term "self employed" instead of "chargeable person"...

A Chargeable person for practical purposes is anyone who files (or is obliged to file) a self-assessment tax return. The definition is here if you want more detail: http://www.revenue.ie/en/practitioner/tax-briefing/archive/62/tb05.htm

As long as you registered as due to file a Form11 for a particular tax year Revenues systems won't allow the charities to claim the relief on your subscriptions.

Liam D Ferguson

barneystinson wrote: »

I think the cause of confusion here is the use of the term "self employed" instead of "chargeable person"...

A Chargeable person for practical purposes is anyone who files (or is obliged to file) a self-assessment tax return. The definition is here if you want more detail: http://www.revenue.ie/en/practitioner/tax-briefing/archive/62/tb05.htm

As long as you registered as due to file a Form11 for a particular tax year Revenues systems won't allow the charities to claim the relief on your subscriptions.

I wonder does that mean that if, because beanie2012 seems to be falling into the category of self-assessed due to the rental income, they can therefore claim the tax relief on charitable donations themselves, like a self-employed person.