Ok, SOOO here it is… the rental income tax calculation – pretty straight forward if you think about it! Right?
Only joking, the rental calculation is actually really straight forward! Pheww I hear you say ….
Firstly do you need to calculate your property rental income?
Have you made a gain from property? Well firstly well done as risk deserves reward. Secondly you are probably in the right place! If you’re interested in this topic go to our “rental Tax income article” where you will find out more about your expenses you can claim etc.
What is the tax calculation for rental income?
Well there is a trick, our friends over at icalculator have created an online calculator to basically look at the income you would earn after all expenses. Great Right?
So first go to the website and work out what your gross taxable income
This will tell you exactly how much profit you have actually made from your property and then it’s just a matter of applying this to your income at your tax rate.
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
- waived rent due on the grounds of hardship.
Multiple rental properties
You may receive rental income from a portfolio of properties you own. If you do, you must calculate a profit or loss separately 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.
Tax incentive schemes for rental income
If you have a rental property you may be able to claim one of the following tax incentive schemes:
You cannot claim Section 23 Relief or relief under the Countrywide Refurbishment Scheme for work carried out after 31 July 2008 on:
- construction
- refurbishment
- conversion.
There are also many variations of rent to buy schemes. These schemes allow you to rent out a property for a trial period before your tenant decides whether to buy it.
High Income Earner Restriction (HIER)
If you claim any of the above tax incentive schemes you may be affected by the High Income Earner Restriction (HIER).
More about us!
Peak Accounting Solutions
As you can tell we are not your normal Accountants we come from a wide range of different backgrounds. We enjoy helping people with their taxes and understand owning property is one of the main taxes to look after.
If you have any queries on the above, please do not hesitate to get in touch with me directly, or with the team on contact@peakaccountingsolutions.ie and we can assist you with landlord insurance and also finance with our dedicated certified partners.
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