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Tax implications of renting my house

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  • 06-02-2018 10:06am
    #1
    goofy141
    Registered Users Posts: 83 ✭✭


    Hi guys,

    Can someone explain to me the tax implications of renting out my house? I am trying to decide between selling it or renting it out.

    Many thanks


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    #2
    Moonbeam
    Moderators, Education Moderators, Society & Culture Moderators Posts: 18,953 Mod ✭✭✭✭Moonbeam


    depending on how much you earn you pay tax on the rental income at your higher rate of tax less deductible expenses.
    https://www.revenue.ie/en/property/rental-income/irish-rental-income/how-do-you-declare-your-rental-income.aspx


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    #3
    punisher5112
    Registered Users Posts: 24,644 ✭✭✭✭punisher5112


    Would you think of renting a room as you can earn €14k tax free....


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    #4
    Caranica
    Registered Users Posts: 10,119 ✭✭✭✭Caranica


    It's not just income tax you have to factor in, as soon as you start renting it out the capital gains tax clock starts ticking, that will affect any profits from a sale.


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    #5
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    It's not just the tax implications. What will you do if the tenant stops paying rent and wrecks the place? Do you have a spare 10K to deal with that? Will you be in it long tem enough to recoup that loss?


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    #6
    Luckysasha
    Registered Users Posts: 1,042 ✭✭✭Luckysasha


    Caranica wrote: »
    It's not just income tax you have to factor in, as soon as you start renting it out the capital gains tax clock starts ticking, that will affect any profits from a sale.

    Capital gains tax only kicks in if you sell the house for more than you paid for it. The tax liability is on the profit you make. Or am I missing something ?


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    #7
    goofy141
    Registered Users Posts: 83 ✭✭goofy141


    So if I have mortgage payments of €1300 and the rent is €1500, am I only paying tax on the extra €200 or on the entire amount?


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    #8
    Alkers
    Registered Users Posts: 6,832 ✭✭✭Alkers


    goofy141 wrote:
    So if I have mortgage payments of €1300 and the rent is €1500, am I only paying tax on the extra €200 or on the entire amount?


    The entire amount, unless you still live there yourself


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    #9
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    goofy141 wrote: »
    So if I have mortgage payments of €1300 and the rent is €1500, am I only paying tax on the extra €200 or on the entire amount?

    You need to know how much is capital and how much is interest repayments. 80% of interest repayments are written off against tax.

    So Rent of €1500 = €18,000 PA
    Your tax is 18,000 @ 52% = 9,360
    9360 less expenses let's say €3,000 net tax liability (guess)

    18,000 Less
    3,000 Tax
    15,600 Mortgage
    1,500 Expenses (not including mortgage interest)
    (2,100) Loss or about €200 a month you'll need to put in cash flow wise.
    Add Capital repayment on mortgage for net profit


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    #10
    goofy141
    Registered Users Posts: 83 ✭✭goofy141


    Samuel T. Cogley wrote: »
    You need to know how much is capital and how much is interest repayments. 80% of interest repayments are written off against tax.

    So Rent of €1500 = €18,000 PA
    Your tax is 18,000 @ 52% = 9,360
    9360 less expenses let's say €3,000 net tax liability (guess)

    18,000 Less
    3,000 Tax
    15,600 Mortgage
    1,500 Expenses (not including mortgage interest)
    (2,100) Loss or about €200 a month you'll need to put in cash flow wise.
    Add Capital repayment on mortgage for net profit


    Really helpful thank you so much.


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    #11
    NIMAN
    Registered Users Posts: 33,621 ✭✭✭✭NIMAN


    check out www.irishlandlord.com

    Plenty of good info there too.


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    #12
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,218 Mod ✭✭✭✭godtabh


    Dont rent out the whole house. Save yourself the potential hassle and only get licensees.


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    #13
    goofy141
    Registered Users Posts: 83 ✭✭goofy141


    godtabh wrote: »
    Dont rent out the whole house. Save yourself the potential hassle and only get licensees.

    Can you explain that?


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    #14
    Gumbo
    Moderators, Society & Culture Moderators Posts: 39,351 Mod ✭✭✭✭Gumbo


    goofy141 wrote: »
    Can you explain that?

    Rent out room by room.
    you can earn 14k per year tax free, but you must be living in the property.


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    #15
    Claw Hammer
    Registered Users Posts: 6,238 ✭✭✭Claw Hammer


    godtabh wrote: »
    Dont rent out the whole house. Save yourself the potential hassle and only get licensees.

    The RTB have deemed those kind of lettings to be tenancies.It is not that easy to get around the tenancy laws.


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    #16
    Spanish Eyes
    Registered Users Posts: 15,961 ✭✭✭✭Spanish Eyes


    Claw Hammer wrote: »
    The RTB have deemed those kind of lettings to be tenancies.It is not that easy to get around the tenancy laws.

    I don't think that's the case if the owner is living in the same property though. If s/he is, then as long as the rent from all rooms does not exceed the threshold for Rent a Room it's all good.

    However I understand what you mean about a non resident (in the property) landlord letting the property out on a room by room basis.


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