Expenses You Can and Can’t Claim as an Irish Landlord
Explore the intricacies of Irish landlord taxation with an overview of allowable expenses and restrictions, offering insights into optimizing returns while navigating the complexities of rental property management.
Read the blog below for tips on what you can claim or download our free guide to Irish landlord taxes here.
If you’re new to the rental game in Ireland, you might have done some preliminary research into what sort of expenses you can claim when renting property for residential purposes, but be a bit stumped or at least unsure as to what exactly it all means in terms of Irish landlord taxes.
That's why we've compiled this overview of the absolute basics with regard to expenses and relief for Irish landlords. You can find a more comprehensive guide to many of the expenses detailed here throughout our various updates, but if you're a newbie and just want the low-down on rentals and tax you've come to the right place.
What sort of tax will I pay?
Generally speaking, you'll pay either 20% or 40% tax on your net rental income, depending on your personal circumstances (marital status, how much you're charging tenants, whether you have other forms of income, etc). Unless you're renting in your own home and earning below a certain amount, you'll have to register with the Private Residential Tenancies Board and lodge a Landlord's tax return every year by 31 October.
However, there's a whole plethora of expenses Revenue will allow you to claim back on to reduce the amount of tax you pay each year, including Irish landlord taxes.
If you are a landlord, you could be due a tax refund
What can I claim expenses on?
Luckily the list of things you can claim as expenses is quite a bit longer than the list of things you can't. Some of them are fairly obvious – such as maintenance and wear and tear expenses - but the Revenue is also pretty reasonable in that it will deduct money for advertising and agency expenses as well, related to Irish landlord taxes.
Here is an overview of the expenses you're able to claim against your return every year as a Landlord in Ireland:
1. PRTB Registration
Unless you fall under certain extenuating circumstances (as with Rent-a-Room relief) it's necessary for Irish Landlords to register with the Private Residents Tenancy Board.
At present, it's €40 per tenancy and you have to register within a month of the tenancy's start date. If you're late, there's a fee of €10 per every month it is late. The amount you pay to register multiple tenancies in a single building per year is typically capped at €375.
You can claim back the full amount for both the initial fee and the sum you paid per tenant, provided you haven't incurred any penalties for late registration related to Irish landlord taxes.
2. Repairs and Maintenance/Wear and Tear
These essentially cover the cost of maintaining your property to a livable standard for your tenants, and they can be deducted as part of your Irish landlord taxes. Repairs and Maintenance covers the cost of fixing broken windows/locks, servicing boilers etc, whereas Wear and Tear is a deduction taken off your taxable income to account for the price of furnishings and fittings if you've pre-furnished your property for tenants.
Note: Wear and Tear covers all expenditures on brand-new furnishings (provided you keep all your receipts), but Repairs and Maintenance have to be essential and non-profitable to qualify. For example, you can claim maintenance if you hire someone to paint your property, but can't claim for your own labour if you paint it yourself.
If you are a landlord, you could be due a tax refund
3. Advertising Expenses and Estate Agent Fees
Anything you pay towards the publicising property you want to rent is fully claimable as part of your returns, be it through advertising (putting something in the paper or using a website such as daft.ie, for example) or using the services of an estate agent – a key consideration when wondering how to claim tax back.
4. Management/Agent Fees
If you use an intermediary to collect rent on your behalf or deal with tenants (as is the case for non-resident landlords, for example) this service is tax-deductible, so it's definitely a valuable aspect for those looking to optimize Irish landlord taxes and potentially claim tax back.
5. Local Service Charges
If you pay for rubbish collection, recycling, or make any other payments relating to services provided to your rental property by the local council, you are entitled to take a deduction for them – a potential benefit when seeking tax back. This only applies if you cover these charges – if you bill them to your tenants, you obviously won't be able to claim them back.
Expenses for non-resident Landlords
6. Legal/Accounting Fees
It's tax-deductible if you've paid a professional to provide you with any legal or accounting services relating to your property - to have leases drawn up or to aid you with Stamp Duty, for example, or to prepare rental accounts, a crucial factor for those aiming to get tax back. These are both extremely useful resources if you're not used to the more bureaucratic side of letting property, so you might want to look into this if you're drowning in unfamiliar paperwork!
7. Insurance Premiums
If you've taken out any insurance policies relating to rental properties, you're entitled to claim back on any premiums, a consideration for maximizing tax back. This includes premiums paid on Mortgage Protection Policies.
What can I not claim expenses on?
So as you can see, generally speaking, the list of things you are able to claim back as expenses is reasonably comprehensive. However, there are inevitably going to be a few taxes that you're liable for, a reminder to consider what you can't claim when seeking tax back.
1. Pre-letting/post-letting Expenses
This is probably the most important one to bear in mind. If you're renting out property, repairs or alterations taken out when the property is not under lease are not tax deductible. If you're renovating a property in preparation for tenancy, those expenses are going to be off your own back, so just be sensible with regard to how much you spend to ensure you don't make a loss.
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2. Stamp Duty
If you're buying a new property to rent, you'll have to pay a 1% Stamp Duty on any purchase up to €1,000,000 and a 2% balance on any amount after that bracket. This isn't tax deductible - However, any legal aid you get with regard to Stamp Duty is.
If you are a landlord, you could be due a tax refund
While the prospect of paying that hefty income tax on any earnings you make as a landlord might be daunting, you are entitled to a lot of leeway in terms of what you can claim. And remember – if you want to file that return without the hassle, Taxback provides a Landlord Returns service. Not only will we file the return for you, but we'll make sure you get the maximum rebate you're legally entitled to.
Click here for more information and to use our tax back calculator.
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