If you are a new landlord, you might be wondering about your tax liabilities on the rental income you receive. In this article, we run through everything you need to know about rental income tax returns, covering your liabilities, how to register for self-assessment, the expenses you can deduct, how to fill in Form 11 correctly, as well as all applicable deadlines; so you have a handy guide to refer to whenever you need.
Step 1: Registering for Self-Assessment
If you earn income from renting out property, you are liable to pay tax on that income and you must register for self-assessment with Revenue. It doesn’t matter if the income you receive from renting your property is your primary source of income, or if it’s additional to income from PAYE taxed employment; you must complete an annual self-assessment to calculate and pay your tax liability, and to file your annual income tax return.
Step 2: Finding out what you can Claim Back
As a landlord, there are allowable deductions you can make on your rental tax return that will reduce your tax liability. Fortunately, many of the expenses incurred in managing a rental property can be claimed against rental income, including:
• Private Residents Tenancy Board (PRTB) Registration Fees
• Qualifying Mortgage Interest (75%)
• Management & Agent Fees
• Advertising & Estate Agent Expenses
• Insurance Premiums
• Legal Fees
• Accounting Fees
• Local Area Charges (unless you pass them onto the tenant)
• Repairs & Maintenance – not work carried out yourself or non-essential / profitable works
• Depreciation / Wear & Tear – 12.5% of the cost every year for up to 8 years
It’s important to note that you must register with the PTRB before you can claim mortgage interest against your rental income. Regardless of whether they are tax deductible, it’s important to maintain complete records of all expenses that pertain to your rental property.
We advise landlords to keep all supporting records – including invoices, receipts, bank statements and cheque stubs – for at least six years, unless told otherwise, in case your claims need to be investigated.
Step 3: Filling in Form 11
It’s crucial you don’t make any mistakes when you file your tax return. You will need to provide the following information on Form 11:
• Your Name, Date of Birth and PPS number (and for your spouse, if applicable)
• PAYE Income – Gross Pay, Tax Paid, Gross pay for USC and USC Paid (found on your P60 or P45)
• Total of any taxable social welfare amounts received during the year
• The accounts required (Trade, Profession, Vocation) including total income, sales and receipts, as well as a breakdown of expenses. An accounts extract will be required for each
• Details of any losses and capital allowances
• Any rental income and related expenses, or details of other income
• Tax Credits – check your tax credit certificate (TCC) for details of your personal tax credits.
• Capital Gains or Gifts/Inheritances if applicable.
Step 4: Deadlines
Irish tax returns are due to be filed on or before the 31st October of each year. If you submit your income tax return after the deadline of 31st October, you will be liable to pay a surcharge on top of your tax liability; interest can also apply in certain cases.
Once the deadline of 31st October has passed, you have a further two months to file your return and pay a 5% surcharge. After this date, the surcharge rises to 10%.
Keeping up-to-date with your tax liabilities can be a daunting prospect for new landlords, but making mistakes or being late with your tax returns can cost you time and money. If you are a new landlord and need help with your rental income tax returns, simply get a quote or contact a member of our expert team today.