Foreign rental income

What expenses and deductions are allowed?

You can claim expenses and deductions that are allowed under Irish tax law and that are fully related to earning rental income. These include:

  • managing the property
  • insurance
  • repairs
  • local authority rates
  • interest on loans used to purchase the property
  • fitting out and furnishing the property.

Capital allowances

You can claim capital allowances on the fitting out and furnishing of your foreign rental property. The fixtures and furniture must belong to you and be in use at the end of each year that you claim for. You can claim these allowances over eight years at 12.5% per year.

You may sell your fixtures and fittings during the year. If you do, you may be allowed an additional allowance. This is called a balancing allowance.

Your sale proceeds may exceed the depreciated value of these fixtures and fittings. If they do, there may be a clawback of allowances that you have already received. This is called a balancing charge.

See the example below:

Mortgage interest relief

You can claim mortgage interest relief against your rental income. The interest must be from a mortgage used directly to buy, improve or repair your rental property.

Mortgage Interest Relief is restricted to a percentage of the interest as follows:
Interest accrued on or after 7 April 2009 to 31 December 2016 75%
Interest accrued from 1 January 2017 to 31 December 2017 80%
Interest accrued from 1 January 2018 to 31 December 2018 85%
Interest accrued from 1 January 2019 100%

If you buy the property through a company, you cannot claim a deduction for interest payments. This is because the mortgage has been used to purchase an interest in the company and not to purchase the property directly.

Can you claim interest relief from the time that you take out the loan?

You can only claim for interest that is paid during the time the property is let. This means you cannot claim for interest paid:

  • between the time you purchased the property and the time you first let it
  • between lettings where you or others stayed in the property rent free.

Next: What expenses and deductions are not allowed?