Not All Rental Income Is Treated the Same
Most rental income is considered passive income and is taxed under Schedule D Case V. But other forms (like short-term lets or emergency accommodation) may be classified as trading income and taxed differently. Understanding this distinction is vital for Irish landlords.
Rental Income Characteristics:
- Tenant has exclusive possession for a defined period
- Covered under Landlord & Tenant legislation
- Income taxed as rental income with limited deductions
Trading Income Characteristics:
- Guest or licensee does not have exclusive possession
- Owner may access premises to clean, change linens, etc.
- Letting includes services (e.g. meals, cleaning)
- Income taxed as trading income at up to 52% (if all credits used)
- Common example: AirBnB.
Key Considerations:
- Rental losses cannot offset trading income (and vice versa)
- Separate profit & loss accounts must be kept for each property
- VAT may apply where turnover exceeds €42,500 in 2025
Accounting Rules for Trading Income:
- Must be laid out “wholly and exclusively” for trade
- No requirement that expense is “necessary,” just that it furthers the trade
Unsure how your property income should be classified? FastTax.ie can review your situation and help you stay tax compliant.
