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Tax on rental income?!

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  • 02-06-2008 9:09pm
    #1
    curiousgeorge19
    Closed Accounts Posts: 10 ✭


    I recently purchased a place, which I may not live in as I’m living with my girlfriend
    What are the tax implications if I was to rent out my place, and live with partner?
    Is it true that nearly 50% of rental income would go to the revenue, and if I sell it on I’ll be penalized further?
    Perhaps someone can clear this up!;)


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    #2
    zod
    Closed Accounts Posts: 2,025 ✭✭✭zod


    it's worth your while to designate it as your principle private residence and rent rooms

    http://www.citizensinformation.ie/categories/housing/buying-a-home/owning-a-home/rent_a_room_scheme

    If you rent out a room (or rooms) in your principal private residence to private tenants during the relevant tax year, the rental income you earn will be exempt from income tax, provided this income does not exceed €10,000 (in 2008). This is called the "Rent a room" scheme. Where more than one individual is entitled to benefit from the rent (i.e., you and your spouse, etc.), the limit of €10,000 is divided between the individuals concerned. Tenants who rent out a room(s) in your home are entitled to claim tax relief on rent paid.


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    #3
    mydarkstar
    Registered Users Posts: 249 ✭✭mydarkstar


    check out the Revenue website, under Leaflets & Guides they have a Guide to Rental Income (IT 70).

    You will be taxable on your net rental income (ie the rent after deduction of allowable expenses), the IT 70 guide will give you an idea of what expenses are allowable. The rate of tax you pay on the rent will depend on your total income... the total of the rent & your other income/employment. So you might only pay 20% or you could end up paying 41%. It's not correct to say you will be "penalised" when you sell the property in future, but as it is an investment property (and not your home) you will be due to pay Capital Gains Tax on any gain you make on the resale. There's a leaflet on calculating CGT on the Revenue website too, check it out.


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