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Foreign rental income

  1. Overview
  2. What expenses and deductions are allowed?
  3. What expenses and deductions are not allowed?
  4. How to calculate your taxable foreign rental income
  5. Foreign rental income and double taxation

Foreign rental income and double taxation

You may have to pay tax on your foreign rental income in the country your property is located in and also in Ireland. This will depend on your residence or domicile status.

You may be able to deduct some, or all, of the foreign tax you have paid when you are calculating how much Irish tax you owe. The amount that you can reduce your Irish tax by will depend on whether Ireland has a Double Taxation Agreement (DTA) with the country your property is located in.

Some countries charge a tax on deemed rental income. This is the rental income you are expected to have earned from renting out the property even if it was not rented out. You cannot offset this tax against the amount of Irish tax you owe.

See examples below.

  • Example 1

    Where Ireland and the other country have a DTA

    Calculate the Irish tax on your foreign rental income where Ireland and the other country have a DTA
    IncomeValue
    Irish income (all sources) €90,000
    foreign rental income €10,000
    Total income €100,000

    The foreign rental income is 1/10 of the total income. Assuming an Income Tax rate of 40%, the Irish tax due on the total income is €40,000. 1/10 of this is €4,000, which is the Irish tax due on the foreign rental income.

    Calculate the Irish tax on the foreign rental income, after offsetting the foreign tax paid where Ireland and the other country have a DTA
    IncomeValue
    Irish tax due on foreign rental income €4,000
    minus foreign tax paid on foreign rental income (€3,500)
    Irish tax due on foreign rental income after offsetting foreign tax paid €500
    Calculate the total Irish tax due where Ireland and the other country have a DTA
    IncomeValue
    Irish tax due on total income €40,000
    minus Irish tax due on foreign rental income (€4,000)
    Irish tax due on Irish sourced income €36,000
    plus Irish tax due on foreign rental income €500
    Total Irish tax due €36,500

If Ireland does not have a DTA with the country your property is located, you can claim a deduction for the foreign tax paid. You can offset this against your foreign rental income when calculating the Irish tax due.

  • Example 2

    Where Ireland and the country does not have a DTA

    Calculate foreign rental income taxable in Ireland where Ireland does not have a DTA
    IncomeValue
    foreign rental income €10,000
    minus foreign tax paid on foreign rental income (€2,000)
    foreign rental income taxable in Ireland €8,000
    Calculate Irish tax due on foreign rental income where Ireland does not have a DTA
    IncomeValue
    Irish income (all sources) €90,000
    plus foreign rental income taxable in Ireland €8,000
    Total income €98,000

    Assuming an Income Tax rate of 40%, the Irish tax due on the total income of €98,000 is €39,200.

Published: 13 May 2024 Print this page

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