renting house, while not living in country, tax

LegacyUser

if you own a house, and rent it out for a year, while you're not living in the country, are you exempt from paying tax on the rental income?

aniascor

Not exactly - your tenants have to deduct the tax from the rent before paying you. Then they have to pay the tax to revenue.

ams

this would only apply if you are non resident. you should still be tax resident in ireland if you are only away for a year so you would have to make a case V return to the revenue.

If you are in Ireland for 183 days or more during a tax year or
if you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year.

therefore you will have to pay tax on the rent!

Victor

Just rent some rooms out for less than ~€7,000 for the year under the Rent-a-Room scheme and pay no tax on the rent.

See www.revenue.ie

Diaspora

Presumably if you are out of the country for a year and once the property isn't too large you won't exceed your tax free allowances if you time your holiday with the tax/calender year.

You are entitled to deduct any legitimately incurred expenses such as works to the property; managment fees; marketing expenses and if you have owned the property for more than 5 years you might be entitled to deduct mortage interest payments.

The risks are if you have owned the property for less than 5 years and it is rented out you may be liable to refund any lower/nil rate of stamp duty you paid upon purchase as it is technically now an investment property vs a Private Principle Residence (PPR)

Victor

Diaspora wrote:

Presumably if you are out of the country for a year and once the property isn't too large you won't exceed your tax free allowances if you time your holiday with the tax/calender year.

But he will be taxed on foreign and domestic earnings.

iguana

Surely you only pay tax on the profit? So if you get €10,000 in rent but pay €9,000 on mortgage then you only pay tax on €1,000?

On the other hand if you own the house less than 5 years, can't you be made pay excess stamp duty, as you are no longer an owner occupier? And what happens with TRS?

Diaspora

Iguana

No stamp duty claw back lasts five years as its intention was not to tie people down but to prevent abuse of various incentives or reforms of the thresholds for different circumstances such as First Time Buyers.

Victor

That is true on EU and possibly US earnings but my first impression of a one year period is always someone taking a year out to live in $2 hostals with no air-con

gamer

you have to pay tax on total rent, if it gos over 7100, ie tax on say THE FULL 10k, see revenue.ie rent a room scheme.you can claim various things as a landlord against tax,like mortgage interest ,maintenance,etc,fee to accountant,for doing accounts.

Victor

iguana wrote:

Surely you only pay tax on the profit? So if you get €10,000 in rent but pay €9,000 on mortgage then you only pay tax on €1,000?

That would have to be €9,000 in mortgage interest, not the whole repayment.

But still if earning abroad, tax credits would be used up quite quickly.