Gross Rental Income less Allowable Expenses less Capital Allowances equals Taxable Rental Income.
The following are examples of the type of expenses that may be claimed for :
It is not generally possible to claim for the following expenses :
An allowance for Wear and Tear of furniture and fittings can be claimed in respect of all furnished properties. This normally will cover such items as carpets, electrical appliances, central heating, furniture, etc
From 1 January 2003 the allowance is 12.5%, per year, each year for 8 years. Prior to this, the allowance was 15% per year for the first 6 years and 10% in the year 7. An itemised list of capital expenditure should be attached to each year's tax return so that the allowance can be calculated.
Additional Capital Allowances are also available in relation to certain Capital Expenditure on qualifying properties under the various incentive schemes (Urban Renewal, Rural Renewal etc.)
Example Rent Account
The following is a typical example of a Rental Income Computation
|Less Allowable Expenses|
|Letting Agent Fees||1,200|
|Wear and Tear Allowance
Furniture & Fittings
Say Cost 6,000 x 20%
|Taxable rental income||€850|
If total allowable expenses exceed the rents received, the landlord incurs a rental loss for a particular tax year. These losses may only be offset against other rental income.
It is not possible to offset such losses against other non-rental income sources (e.g. PAYE, business profits etc). Unused losses can be carried forward for offset against future rental profits.
The 2001 Finance Act introduced a valuable tax relief for individuals who rent a room (or rooms) in their own home. Income from such "Rent a Room" arrangements is exempt from tax, provided the gross rent received does not exceed €7,620 (IR€6,000) in a calendar tax year.