Tax Breaks For Landlords – What Can You Claim?

If you are a landlord with property in Ireland, you must declare any rental income to the Revenue Commissioners. Regardless of your earnings, tax rate band, country of residence or other personal circumstances, you are required to file an income tax return and pay any tax you owe every year.

If you’re new to life as a landlord, however, a rental income tax return can look pretty daunting. Many first-time landlords find the self assessment process difficult and are unaware of the specific allowable expenses and reliefs they can deduct from their tax bill.

If you’re wondering about your landlord tax liability and how to claim any available tax credits for landlords, take a look through this simple guide to find out more about calculating, filing and reducing your tax payments as a landlord.

Introducing Tax Relief for Landlords

A new initiative aimed at encouraging landlords to maintain their rental properties in the market has been announced in the Irish government’s 2024 Budget. This initiative provides a new tax relief for small landlords who pledge to keep their rental properties available for the next four years, from 2024 to 2027.

The tax-free rental income effectively translates into a 20% saving on each limit. In 2024, landlords can claim tax relief of €600. This relief increases to €800 in 2025 and €1,000 for 2026 and 2027.

To qualify for the tax relief, landlords must agree to maintain their rental properties in the market for the entire duration of the scheme, up to the end of 2027. If they withdraw their properties from the rental market before this period, they will be liable for the taxes they would have avoided.

How do I calculate my rental income tax?

The amount of tax on rental income depends upon your profits for the tax year in question, your allowable expenses, your personal circumstances (i.e. marital status, tax rate band), and any additional sources of income you may have.

In general, your rental income will be taxed at either the standard rate of 20% or the increased rate of 40%. In addition, you will be liable to pay 0.5% to 8% Universal Social Charge (USC), depending on any additional earnings you may have. If you are an Irish Tax Resident, you are also liable to pay PRSI at 4% on your rental income profit.

You may also be required to pay preliminary tax, which is a payment to the Revenue Commissioners based on your estimated tax liability for the current year. However, if it is your first year as a landlord, you do not need to pay preliminary tax.

Landlords must file their tax returns and make any required payments by 31 October of each year.

What expenses are allowable for rental income?

As a landlord, it’s important to be aware of any allowable expenses you may be eligible to claim as part of landlord tax reliefs, as you will only be paying tax on any profits you earn from rental income after expenses.

There are several expenditures you can claim against your rental income to ensure you get the most of out the landlord tax breaks available, the most common being:

  • Maintenance costs (painting, cleaning, etc.)
  • Mortgage Interest
  • Insurance premiums
  • Necessary repairs
  • RTB registration fees
  • Letting Agent and Management Fees
  • Advertising fees
  • Professional fees such as Accountancy costs

The Finance Act 2017 sought to address the above and introduced an allowable deduction of up to €5,000 for certain pre-letting expenses incurred on vacant residential properties. From 1 January 2023, this cap on the authorised deduction has been increased to €10,000 and the specified period for which the property was vacant has been reduced from twelve to six months. The landlord must incur the expenditure during the twelve months prior to first letting the property.

You can also claim capital allowances (wear & tear) on the cost of buying furniture and white goods for your property at a rate of 12.5% of the cost per year, for a maximum of eight years.

Many landlords are also eligible for relief on mortgage interest paid in the year. When calculating your rental income for tax purposes, you can deduct the interest on the mortgage used to purchase, improve or repair the rented property. However, you must be registered with the RTB to be eligible for this relief.

There are also a few expenses that you cannot claim when calculating your income, including local property tax, pre- or post-letting expenses, and any cost for your own labour when repairing the property.

Don’t forget: Any allowable expenses can only be deducted from your rental income total if you have the proper relevant documentation. Be sure to keep all receipts, work orders, bills and official correspondences or you may be allowed to claim your expense.

What if I live outside of Ireland?

If you own and rent your property in Ireland but live outside the country, you are considered to be a non-resident landlord. Regardless of where you live, however, any rental income made on your Irish property must be declared to the Revenue Commissioner in the form of a tax return, and any tax you owe must be paid on time.

If you are classified as a non-resident landlord, you will need to nominate a Collection Agent. A Collection Agent is a person –  either a professional representative such as a solicitor, or a personal connection such as a friend or family member you trust – who will take on the responsibility of making annual tax returns to the Revenue Commissioners on your behalf.

Alternatively, you can have your tenants or letting agent withhold the income tax from their regular rent payments and pay this directly to Revenue on your behalf.  For example, if the income is taxed at the standard rate or 20%, the tenant/letting agent would pay 80% of their rent amount to you and the 20% difference to the tax office.

To find out more about nominating a collection agent, or if you need advice on filing your rental income tax return, be sure to check out our Non-Resident Landlord Guide to Irish Tax Returns.

How do I declare my rental income?

If you earn any income from renting property in Ireland, you must declare this to the Revenue Commissioners. However, the required method for doing so will depend upon your net income.

Landlords earning a net income of more than €5,000 are required to register with the Revenue Commissioners for self assessment and file a Form 11 to declare their earnings.

Landlords earning a net income of €5,000 or less must declare their earnings in the non-PAYE section of the Revenue Commissioner’s online portal.

When Do I Need to Submit My Rental Income Tax Return?

It is essential that you declare and pay your rental income tax by the tax return deadline each year. Failure to meet the deadline or pay the correct amount can result in costly fees.

The Pay and File deadline for rental income is the 31st of October in the following year.

Therefore the filing deadline for 2023 tax returns will be the 31st of October 2024.

Need Help Claiming Your Landlord Tax Reliefs?

The introduction of tax breaks for landlords is a positive step towards addressing the housing crisis in Ireland. By providing landlords with financial incentives to maintain their properties in the rental market, the government can help to increase the supply of available homes and alleviate the burden on renters.

Remember, your tax return and payment must all be submitted by the tax return deadline. Failure to do so may result in a surcharge, interest and penalties. That’s why we recommend consulting a tax expert to assist you with payments and filing each year. Request a quote today to get started.

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