Tax on net rental profit.
Tax on rental profit
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Net rental profit
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After-tax income
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What Revenue actually taxes when you let a property
Rent from a long-term residential let is taxed as Case V income. That is an important phrase, because it tells you what you can and cannot deduct. Revenue does not tax the rent that lands in your account. It taxes the profit left after the allowable running costs come out. Get the deductions right and the bill shrinks a long way below the headline rent.
The deductions Revenue accepts include letting agent fees, the cost of repairs and maintenance, building and contents insurance, accountancy fees for preparing the rental accounts, the Residential Tenancies Board registration fee, and any service charges you pay as landlord. Furniture and white goods are written down at 12.5 percent a year over eight years as capital allowances, so a 4,000 euro kitchen refit gives you 500 euro of relief annually rather than the whole amount at once. The single largest item for most landlords is mortgage interest, and since 2019 the full 100 percent of interest on a residential let is deductible again.
A worked example on 26,000 euro of rent
Say you receive 26,000 euro of rent in the year. You pay 3,500 euro in agent fees, insurance, and repairs, and 6,500 euro in mortgage interest. Your profit is 16,000 euro. Because this stacks on top of a salary that already uses your standard rate band, every euro is taxed in your top bracket. This tool uses a single blended marginal rate of 52 percent, which is the 40 percent higher income tax rate plus 8 percent USC at the top band plus 4.1 percent PRSI, so it does not split the three charges out separately.
| Step | Amount |
|---|---|
| Gross rent | 26,000 euro |
| Less running costs | 3,500 euro |
| Less mortgage interest | 6,500 euro |
| Taxable rental profit | 16,000 euro |
| Tax at 52 percent marginal rate | 8,320 euro |
| Kept after tax | 7,680 euro |
The chart below shows where the 26,000 euro of rent ends up. Two thirds of it leaves before any tax, swallowed by the lender and the running costs, and Revenue then takes more than half of what remains.
The mistakes that cost landlords money
The most common error is forgetting to register the tenancy with the RTB. If you have not registered, Revenue can disallow the mortgage interest deduction entirely, which in the example above would push the taxable profit from 16,000 euro to 22,500 euro. A second trap is treating an improvement as a repair. Fixing a broken boiler is a deductible repair. Replacing a working kitchen with a better one is capital expenditure, so it is written off over eight years, not claimed in full this year.
One practical tip from experience: keep a separate bank account for the property. When every rent receipt and every cost runs through one account, the year-end return takes an evening rather than a weekend, and you are far less likely to miss a deductible expense that would otherwise sit forgotten on a personal card statement.
Common questions
Can I deduct the capital portion of my mortgage repayment?
No. Only the interest element of the repayment is allowable. The capital you repay each month is reducing your own debt and building your equity, so Revenue does not treat it as a cost of earning the rent. Your lender statement splits the two figures for you.
When is the rental tax actually due?
Rental profit goes on your Form 11 self-assessment return. The balance for a given year, together with preliminary tax for the next year, is due by 31 October, or in mid-November if you file and pay through ROS. Many accidental landlords are caught out by the preliminary tax requirement in their first year, so set the cash aside as the rent comes in.
Does rent-a-room relief help here?
Only if a tenant rents a room in your own home. Rent-a-room relief gives up to 14,000 euro tax free, but it does not apply to a separate investment property, which is what this calculator is built for.