Rental Income Rental Income Irish rental income is taxed under Case V. Individual is taxed on the rental income less the allowable expenses – rental profit. A rental account should be prepared for each individual property Basis of Assessment Taxed in the year of assessment on the income earned (when it becomes receivable), not when it is actually received.

Schedule D Case V – Rental Income Income from letting a property Easements A portion of premiums on short leases

Schedule D Case V – Rental Income Premiums on short leases Premium x (51-No of years of lease)/50

Rental Income Rental Expenses Expenses that are wholly and exclusively for the purpose of earning rent. Not capital in nature.

Rental Income Rental Expenses Include the following: Ground rent Rates Maintenance Insurance Repairs Services provided/ paid for by landlord Accountancy fees Mortgage Interest

Rental Income Rental Expenses – Mortgage Interest Interest on monies borrowed for the purchase, repair and improvement of the rental property. 100% of interest allowable as a deduction for commercial property. 75% of interest allowable as a deduction for residential property only when the PRTB registration requirements are complied with. A mixed property would be apportioned.

Rental Income Pre-letting expenses In general pre-letting expenses are not allowable. Allowable pre-letting expenses are Advertising expenses Letting fees Legal fees for drawing up the lease

Expenses between leases Rental Income Expenses between leases Expenses are allowed provided that: The landlord does not occupy the property between the tenancies. The property is subsequently the subject of another lease. The expenses would otherwise be deductible.

Schedule D Case V – Rental Income Capital Allowances Capital expenses are not allowed May qualify for capital allowances at 12.5%

Rental Income Example Residential Property Rent Received €6,000 Insurance €650 Repairs €1,300 Interest on loan to improve property €4,000 Replacement Dishwasher €500 PRTB Registration €90 Property was let for the full year. The monthly rent receivable is €600. The tenants did not pay November’s and December’s rent until February 2016.

Schedule D Case V – Rental Income Example Residential Property Rent Receivable €11,000 Insurance for the year €800 Repairs after 1 February 2015 €1,300 Interest on loan for the year €4,000 Accountancy fees €500 PRTB Registration €90 Property purchased on 1 December 2014, first let out on 1 February 2015.

Schedule D Case V – Rental Income Rental Losses Calculated the same as a profit A loss is set against other Irish rental profits in the current year, or Carried forward against future Irish rental profits Cannot be set against other income including foreign rental income

Schedule D Case V – Rental Income Rental Losses Capital allowances applied before losses forward Losses may be carried forward indefinitely

Schedule D Case V – Rental Income Favoured Lettings Where rent receivable under a lease is insufficient to meet; Lessor’s cost of obligations under the leases, and Any expenses borne by the lessor. Losses arising from favoured lettings cannot be used against other rental profit either in the current year or future years

Rental Income Rent a room relief Individual resides in the property as their principal private residence during the tax year. Residential property in the State. Receive rent for one or more rooms in the residence from someone other than their child (ren). Gross Rental Income (before expenses are deducted) must be below €12,000. Income is exempt from Income Tax, PRSI and USC. If Gross Rental Income exceeds €12,000 then the full rental income is taxable.

Schedule F – Irish Dividends Dividends or distributions from Irish resident companies are taxed under Schedule F. Basis of Assessment Dividends are taxed in the tax year in which they are received. The companies financial year for which the dividend is paid is irrelevant.

Dividend Withholding Tax The company paying the dividend is obliged to deduct tax at the standard rate (20%) before they pay the dividend. The individual receives the net dividend. The gross dividend is included in the income tax computation. A Refundable Tax Credit is given in the computation for the tax withheld.