Tips for Landlords on Taxes

Taxes are a complex subject, and they can become even more confusing when you factor in real estate. However, we hope to make it simpler for you with our Top Tax Tips for New Landlords.

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Declare Your Income Tax and Register!

You must declare any rental property income to Revenue if you have any. This can be accomplished by declaring your rental income when you file for income tax. This has to be done starting on the day you initially rent out your property. After registering for income tax, you are subsequently in charge of filing an annual tax return that informs Revenue of the amount of income you earned the previous year.

You are in charge of paying the local property tax.

The owner is liable for paying the local property tax (LPT), which is based on the market value of the property. You cannot include this as an expense on your tax return.

Become a member of the Residential Tenancies Board (RTB)

Landlords are required by law to pay €90 to register with the Residential Tenancies Board. However, once you have registered with the RTB, you can claim a tax deduction for the €90 registration cost as well as a tax relief deduction for mortgage interest against your rental income.

Tax Obligation

Some landlords will utilise rental money to settle the mortgage on their properties. However, it is important to keep in mind that only mortgage interest, not the entire mortgage payment, can be deducted from your income on your tax return. Capital allowances are a factor that is frequently overlooked when estimating the earnings on a rental property. Long-lasting things like furniture are considered capital allowances. These items may be written off at a rate of 12.5% per year, or in other words, at a rate of 12.5% over a period of 8 years.

Tax Preliminary

Once you have registered for Income Tax, you must pay a preliminary tax, which is a payment toward your current tax year’s bill. If you are a self-assessed taxpayer in your first year, you are not compelled to make this payment, but you can contribute to it for the following year to keep the cost down. If you choose not to pay any preliminary tax in your first year, you may end up paying twice in the second year since, even if you were not required to pay it in the first year, the first year is still taxable.

The following are examples of allowable expenses:

Accountancy Fees for the Residence
Tenancy Board (PRB)
Mortgage Payments
Advertising
Property Repair and Maintenance
Fees for Estate Agents
Fees for Management Companies

WHAT’S THE NEXT STEP FOR ME TO DO?

We hope you found this blog useful.

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