Are you a landlord? Revenue are on the lookout

With the news that AirBnB is to hand over landlord information to Revenue, many landlords may now be facing an unexpected rental income tax bill. Why? Some AirBnB landlords may have incorrectly believed that they are entitled to claim rent a room relief. Please see the article from The Irish Independent

Rent a room relief provides for a landlord to earn up to €12,000 per year where they let a room in their sole or main residence as residential accommodation. However, this relief only applies where a room or rooms are being rented on a long term basis as a home.

As such, I thought that this would be a good time to outline some of the main sources of rental income and to highlight the most common deductible rental expenses.

Types of rental

  • Residential property
  • Commercial property
  • Farms
  • Foreign property
  • Holiday homes
  • Section 23
  • Payments for the right to erect advertising signs, communication transmitters or for the grant of a right of way,

Allowable expenses

  • 75% of the interest on a residential mortgage once you have registered the tenancy with the PRTB (please note that you must not claim tax relief at source on a rental property)
  • 100% of the interest on a commercial mortgage
  • Ground rent paid by the landlord
  • Rates
  • Property expenses not reimbursed by the tenant e.g. gas, electricity, central heating, telephone rental, cable television, water and refuse collection
  • maintenance of the property, e.g. cleaning and general servicing, exterior and interior painting and decorating
  • insurance of the premises against fire, public liability insurance, etc
  • Management expenses
  • Accountancy fees
  • repairs, (a ‘repair’ means the restoration of an asset by replacing subsidiary parts of the whole asset). Examples of common repairs which are normally deductible in computing rental income include: 1. damp and rot treatment, 2. mending broken windows, doors, furniture and machines, 3. replacing roof slates. However, you may not claim a deduction for your own labour.
  • certain mortgage protection policy premiums
  • Allowances for capital expenditure may also be available, such as furniture or kitchen appliances.

Dealing with Revenue

  • You must register with Revenue once you commence letting your property, even if you are making a loss
  • Rental income returns are prepared annually on a calendar basis
  • Your rental income must be submitted together with your income tax return on or before 31 October in the year following receipt of your rental income. Eg., Rental for the year 01 Jan 2014 to 31 Dec 2014 must be submitted by 31 October 2015

The above details are not exhaustive and further information can be found by clicking on the link to Rental Income IT70

If you require assistance with any aspect of making your rental income returns, then please do not hesitate to contact me.