Tax on rental income is calculated as follows:
- Rental Income: The total income you receive from your tenants during the tax year.
- Allowable Expenses: These must be incurred wholly and exclusively for the purpose of renting out the property. Examples include:
- Mortgage interest (only on loans used to purchase, improve, or repair the property, and subject to conditions).
- Repairs and maintenance (e.g., fixing a broken boiler, repainting).
- Property management fees (e.g., fees paid to a letting agent).
- Insurance premiums (e.g., landlord insurance).
- Advertising costs (e.g., for finding tenants).
- Accountancy fees (for preparing rental accounts or tax returns).
- Utilities and services (if you pay for them, such as electricity, gas, or waste collection).
- RTB registration fees (if applicable).
- Other costs directly related to the rental property.
Note: Capital expenses (e.g., buying the property or making improvements that increase its value) are not deductible. However, you may be able to claim capital allowances for certain items like furniture or fittings.
- Taxable Profit: Your rental profit is the rental income minus allowable expenses. This profit is taxed as part of your total income.
- Tax Rates: For 2025, the standard rate is 20% on income up to €44,000 (single), €48,000 (one-parent family), or €53,000 (married couple), with 40% on income above these thresholds. You can reduce your tax liability by claiming your tax credits.
- USC & PRSI: Rental income is subject to USC (0.5%-8% depending on total income) and PRSI (4% for self-employed individuals).
