Income earned from renting out any property or home in Ireland during a financial year (i.e., 01 January to 31 December) is legally subject to tax obligations under Irish income tax rules.
Failing to declare rental income—either partially or fully—is considered tax evasion. Individuals liable for this (whether Irish citizens or foreign residents) must pay the outstanding tax liabilities along with interest accrued due to delayed payment. In cases of serious tax evasion, additional penalties may also be imposed.
This is why, before renting a room, house, or commercial space, it is essential to understand how much tax you need to pay on rental income in Ireland.
This blog provides a comprehensive guide on rental property income tax, including regulations and guidelines.
What is Rental Income?
Rental income is any money you earn from renting out a property, whether it’s a house, apartment, office, or even farmland. It’s not just about collecting rent—if you receive payments for things like advertising signs, right of way access, or sporting rights on your land, that’s also taxable rental income.
Now, here’s the key part—rental income is added to your total income, and the tax rate depends on your personal circumstances. Whether you’re an individual, company, or trust, the same tax rules apply.
What is Not Considered Rental Income?
Not all income from property is considered rental income. If you provide short-term accommodation to guests—like through Airbnb or a guesthouse—these fall under other income or trading income, not rental income.
The difference? Tenants have rental agreements, while guests stay temporarily. If you rent occasionally, it’s taxed under Case IV (other income), but if you run it as a business (like a B&B), it’s Case I (trading income).
How Much Tax Do You Pay on Rental Income in Ireland?
When it comes to rental income tax, what really matters is your net rental profit—that is, your total rental income minus allowable expenses like repairs, insurance, or management fees (if any).
Tax Rates on Net Rental Profit
- 20% (Standard Rate) – Applied to income up to the standard cut-off point (€42,000 for single individuals, €51,000 for married couples in 2024).
- 40% (Higher Rate) – Applied to income above the standard cut-off.
- PRSI (Pay-Related Social Insurance) & USC (Universal Social Charge) – Additional charges apply based on total income.
Example Calculation
Let’s say your gross annual rental income is €20,000, and your allowable expenses (like maintenance, insurance, and mortgage interest) amount to €5,000.
Your net rental income = €15,000.
If this is within your standard rate band, you’ll pay 20% tax (€3,000) plus USC and PRSI.
Allowable Expenses and Deductions in Rental Property
As per revenue department, when renting out a property in Ireland, you can deduct certain expenses to reduce your taxable rental income. Here are some key deductions:
- Mortgage Interest – You can claim 100% of mortgage interest as a deductible expense (if registered with the RTB).
- Repairs & Maintenance – Fixing a leaky roof or broken boiler? These costs are fully deductible.
- Insurance Costs – Landlord insurance, property insurance, and liability insurance are all eligible deductions.
- Property Management Fees – If you hire an agent to manage your rental, their fees are deductible.
- Advertising Costs – Expenses for listing your rental online or in newspapers can be written off.
- Legal & Accounting Fees – Costs related to lease agreements or tax advice are deductible.
- Utilities & Services – If you cover bills for your tenant (like waste collection), you can claim them.
Bonus Tip: Always keep receipts and maintain clear records to claim these deductions hassle-free!
Premiums on Leases – What You Need to Know
If you receive a premium for granting a lease of less than 50 years, part of that payment is treated as rental income for tax purposes. This means you’ll need to pay tax on a portion of the premium in the first year of the lease.
The taxable amount is calculated using a simple formula:
P – ((N – 1) / 50) x P
Where P is the premium paid, and N is the lease duration.
This portion is added to your rental profit and taxed accordingly.
How to Report Rental Income for Tax Purposes?
When earning rental income in Ireland, you must declare it correctly based on your taxpayer status. Here’s how:
- Self-Employed or Landlords – Use Form 11 for self-assessed tax returns. This applies if rental income is your main or additional source of earnings.
- PAYE Employees – If you have rental income but are mainly a salaried employee, file a Form 12.
- Companies Renting Out Property – Businesses must report rental income using a Corporation Tax Return (Form CT1).
- Estates & Trusts – If a trust or estate owns the property, use Form 1 to declare rental income.
Filing under the correct category is crucial to avoid penalties. Keeping records of rental income and deductions helps ensure you only pay tax on your net rental profit. If unsure, always consult a tax expert.
How Much Rental Income is Tax-Free in Ireland?
In Ireland, some rental income can be tax-free under specific conditions. The main exemption is the Rent-a-Room Relief.
If you rent out a room in your primary residence to a private tenant, you can earn up to €14,000 per year tax-free. This applies even if you rent out a self-contained unit like a basement or a converted garage. However, it does not apply to short-term rentals, such as Airbnb.
To claim the relief, you must include it in your annual tax return. If your rental income exceeds €14,000, the entire amount becomes taxable.
This scheme is a great way to earn extra income tax-free while making use of unused space in your home. However, as a landlord, you still have legal responsibilities, so it’s best to check the rules before renting out a room.
How Can I Reduce My Rental Income Tax?
Tax on rental income can feel overwhelming, but John Maguire & Co is here to help! With expert guidance, you can legally reduce your tax burden by claiming all allowable expenses and deductions.
From mortgage interest relief to repair costs and property management fees, we ensure you don’t pay more tax than necessary. Our team of expert tax consultants also helps with tax-efficient planning to maximize your rental profits.
Don’t leave money on the table—let us handle the tax side while you focus on your property. Contact John Maguire & Co today for expert rental tax advice!
Conclusion
Understanding rental income tax is key to staying compliant and saving money. From knowing what counts as rental income to claiming deductions, every step matters.
With the right knowledge and expert support, you can reduce your tax liability and keep more of your earnings. For best tax advice and hassle-free filing, trust John Maguire & Co to guide you every step of the way.