Irish rental income
Rental profit and losses
If your rental income is greater than your rental expenses, you make a rental profit. You calculate your rental profit on a yearly basis.
If your rental expenses are greater than your rental income, you make a rental loss.
You pay tax on your net rental income. This is the gross rental income less your total rental expenses and is at your highest rate of tax.
What do you do if you make a loss?
You may make a loss on your rental income. If you do, you can carry forward your rental losses until you can offset them against a rental profit. You can only offset the loss against Irish rental income. You must use capital allowances first, before offsetting the rental losses you brought forward from an earlier year.
See manual Part 04-08-08 for more information on offsetting capital allowances.
You cannot offset rental losses made by your spouse or civil partner against your rental profits. You also cannot offset losses you make from uneconomic rentals against other rental profits. Uneconomic rentals are where it is not possible to make a profit from the rent received.
You cannot offset rental losses against other income or carry them back to a previous year.
You also cannot offset foreign rental losses against an Irish rental profit. You can only offset them against foreign rental income.
Landlords may have their taxable income adjusted if they can prove they:
- could not recover rent due
- or
- waived rent due on the grounds of hardship.
Multiple rental properties
You may receive rental income from a number of properties you own. If you do, you must calculate a profit or loss seperately for each rental property. First deduct the allowable expenses from the individual rents received, resulting in a profit or a loss. You then add each property's profits or losses together to get your yearly net rental income.
- Example
A landlord lets two furnished dwellings in the year ended 31 December 2020. Neither dwelling is let to tenants in receipt of social housing supports.
The mortgage interest on eligible loans was €2,500 for House One and €1,250 for House Two. The allowable interest is 100% of these values.
Calculation of profit or loss for House One
|
|
Calculation | Value |
| Gross rent |
|
€18,000
|
|---|
| Deduct expenses and allowances: |
|---|
| Insurance |
|
€1,100
|
|---|
| Residential Tenancies Board registration fee |
|
€90
|
|---|
| Electricity and heating |
|
€2,100
|
|---|
| Repairs |
|
€1,700
|
|---|
| Allowable mortgage interest |
€2,500 @ 100%
|
€2,500
|
|---|
| Total expenses and allowances |
|
€7,490
|
|---|
| Surplus |
€18,000 - €7,490 |
€10,510
|
|---|
Calculation of profit or loss for House Two
|
|
Calculation | Value |
| Gross rent |
|
€4,000
|
|---|
| Deduct expenses and allowances: |
|---|
| Insurance |
|
€800
|
|---|
| Ground rent |
|
€300
|
|---|
| Residential Tenancies Board registration fee |
|
€90
|
|---|
| Electricity and heating |
|
€1,200
|
|---|
| Repairs |
|
€900
|
|---|
| Allowable mortgage interest |
€1,250 @ 100%
|
€1,250
|
|---|
| Total expenses and allowances |
|
€4,540 |
|---|
| Deficiency |
€4,000 - €4,540 |
-€540
|
|---|
The furnishings cost €2,400 in House One and €8,000 in House Two. The landlord can deduct this expense as wear and tear from her total rental income. The allowable wear and tear deduction is 12.5% of the expense.
Calculation of net rental income for tax purposes
| |
Calculation | Value |
| Total rental income |
€10,510-€540 |
€9,970 |
|---|
| Deduct wear and tear |
(€2,400 @ 12.5%) + (€8,000 @ 12.5%) |
€1,300 |
|---|
| Taxable rental income |
€9,970 - €1,300 |
€8,670 |
|---|
Next: Tax incentive schemes for rental income