Renting out property

poisonated

I’m a landlord and am a bit of a newbie to this whole thing so I apologise for my ignorance. I own a property and am thinking I’d like to move to the UK as I want a change of scene for a couple of years. I have been warned against renting out my property because it would be difficult to move back in when I no longer want to live in the uk. Is this a big difficulty? I am not a high earner(I would eat around 30,000 euro a year, possibly less in the uk). However, I was told that I would be taxed 50 percent for renting out my property. Is this true? Once again, I apologise for possibly stupid questions. Thanks.

PetitPois89

Ripped from tax return plus.ie as I think it’s the clearest explanation:

The rate at which you are taxed on rental income depends upon your tax rate band. The standard tax rate is 20% on earnings up to the standard cut-off rate; any income you collect after this cut-off point is taxed at 40%

Also be prepared for other Landlord costs- RTB registration fee, landlord insurance, maintenance costs, wear and tear, letting fees if letting through an agent

agoodpunt

PetitPois89 wrote: »

Ripped from tax return plus.ie as I think it’s the clearest explanation:

The rate at which you are taxed on rental income depends upon your tax rate band. The standard tax rate is 20% on earnings up to the standard cut-off rate; any income you collect after this cut-off point is taxed at 40%

Also be prepared for other Landlord costs- RTB registration fee, landlord insurance, maintenance costs, wear and tear, letting fees if letting through an agent

You left out USC and property tax

gertyserty

You also pay agent 10% fees then any costs
To repairs add about 1500 euro a year
With covid tents will keep dropping

Bold Abdu

• 20% Tax on profit only
• No PRSI
• Probably very little USC
• Property Tax - You're already paying this anyway, so no change
• Property insurance - will increase but not by too much
• Most expenses are tax deductible.
• You may not require an agent. If you have a trustworthy family member and the details of some reliable tradespeople - handyman to fix a tap, paint a room, electrician to fix a switch, washing machine repair guy etc. it may be easy enough to manage yourself and save 9-10% of your annual rental income.

Caranica

Bold Abdu wrote: »

• 20% Tax on profit only

This one needs clarification. It's not the difference between rent received and mortgage payment as some people believe. Tax is payable on the rent less allowable deductions.

Nobody yet has mentioned the risk of a non paying/overholding tenant. This has serious financial implications if you're relying on the rent to cover the mortgage.

Flippyfloppy

If you're not resident in ireland you will not be paying tax, so different rules should apply here

Graham

OP, Tax treatment for a non-resident landlord is very different so most of the examples above won't apply.

If you're resident in the UK, I would expect most of your rental income to be taxed in the UK.

Emma2019

Flippyfloppy wrote: »

If you're not resident in ireland you will not be paying tax, so different rules should apply here

This is totally incorrect. Income from property in the state is always taxable in Ireland - https://www.revenue.ie/en/jobs-and-pensions/tax-residence/tax-and-tax-credits-for-non-residents.aspx

Rent paid to non-resident landlords is also supposed to be paid with a deduction of 20% of tax because of this reason.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

In addition, depending on the UK residency rules you can be subject to double tax (as the rental income is taxable in both the UK because you're resident there and in Ireland, because the property is located there. You are usually entitled to a double tax credit but this does not always give you relief for the full amount of the tax.

Graham

Unless the rent is paid to an agent in Ireland.

The Student

Graham wrote: »

OP, Tax treatment for a non-resident landlord is very different so most of the examples above won't apply.

If you're resident in the UK, I would expect most of your rental income to be taxed in the UK.

Tax is paid where income is earned and credit given in UK tax returns. Double taxation agreement.

Flippyfloppy

Emma2019 wrote: »

This is totally incorrect. Income from property in the state is always taxable in Ireland.

Rent paid to non-resident landlords is also supposed to be paid with a deduction of 20% of tax because of this reason.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

What is totally incorrect? I didn't say rent wasn't taxable; different rules would apply that the op can look into, you have supplied PDF of same.

Emma2019

They will always be paying Irish tax on an Irish property.

Also they will be ordinarily resident for the first 3 years they leave so will be liable to Irish tax on worldwide income with the exception of the income from the UK job, provided it's carried out totally in the UK.

Samuel T. Cogley

Rent out rooms only and keep a room for yourself. I'm not suggesting any rent-a-room relief skullduggery but at least you'll have a room to move back into if you need it. If you rent the whole house out you may find it very difficult to get the tenants out after two years.

Lux23

Samuel T. Cogley wrote: »

Rent out rooms only and keep a room for yourself. I'm not suggesting any rent-a-room relief skullduggery but at least you'll have a room to move back into if you need it. If you rent the whole house out you may find it very difficult to get the tenants out after two years.

And if this isn't possible, could you find tenants in your circle of family or friends who you feel you can trust to leave when you decide to come home?

Bold Abdu

Caranica wrote: »

This one needs clarification. It's not the difference between rent received and mortgage payment as some people believe. Tax is payable on the rent less allowable deductions.

The OP is unlikely to be making more than 35K in profit each year. Thus, 20% tax applies.

FromADistance

Also worth pointing out if you sell the house in the future having rented same out in the past, you maybe liable to CGT - https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/principal-private-residence-ppr-relief.aspx

Baby01032012

Bold Abdu wrote: »

The OP is unlikely to be making more than 35K in profit each year. Thus, 20% tax applies.

Why do you continue to post with no knowledge?

20% rate band is up to €35300. If he’s earning a salary of 30k that leaves around 5k at 20% and balance at 40%.

It’s not profit that’s taxed. Mortgage capital repayments aren’t tax deductible, neither is local property tax. There is also USC and PRSI due on rental income.

DubCount

I think there is quite a bit of misinformation on this thread, so let me outline what I believe to be the case.

Income from an Irish property will always be subject to Irish income tax. OP will therefore have to complete an annual tax return in Ireland on this Irish source income. As OP will be tax resident in the UK, they will also be subject to UK tax on their worldwide income. This means they will also be subject to UK tax on the income from the Irish property, and they will be allowed a deduction on their UK taxes for any Irish tax paid, under the Ireland/UK double tax treaty. They will also need to complete a UK tax return every year. Finally, as a non-resident landlord, there should be withholding tax on the rental income paid to the OP.

OP is going to need an Irish accountant and a UK accountant. This is an administrative nightmare !!

Baby01032012

DubCount has set it out perfectly. In relation to the double taxation agreement any tax the OP has paid to HMRC on his Irish income will be a tax credit against tax due to Revenue.

Bold Abdu

Baby01032012 wrote: »

Why do you continue to post with no knowledge?

20% rate band is up to €35300. If he’s earning a salary of 30k that leaves around 5k at 20% and balance at 40%.

It’s not profit that’s taxed. Mortgage capital repayments aren’t tax deductible, neither is local property tax. There is also USC and PRSI due on rental income.

The OP will be non-resident so will only have rental income in Ireland.

There will also be no PRSI as there is a bilateral social insurance agreement between Ire & UK.

No knowledge you say!

Bold Abdu

DubCount wrote: »

....Finally, as a non-resident landlord, there should be withholding tax on the rental income paid to the OP.

OP is going to need an Irish accountant and a UK accountant. This is an administrative nightmare !!

Just appoint a Collection Agent - no withholding tax.


Hardly an administrative nightmare. He needs a couple of accountants.

The Student

DubCount wrote: »

I think there is quite a bit of misinformation on this thread, so let me outline what I believe to be the case.

Income from an Irish property will always be subject to Irish income tax. OP will therefore have to complete an annual tax return in Ireland on this Irish source income. As OP will be tax resident in the UK, they will also be subject to UK tax on their worldwide income. This means they will also be subject to UK tax on the income from the Irish property, and they will be allowed a deduction on their UK taxes for any Irish tax paid, under the Ireland/UK double tax treaty. They will also need to complete a UK tax return every year. Finally, as a non-resident landlord, there should be withholding tax on the rental income paid to the OP.

OP is going to need an Irish accountant and a UK accountant. This is an administrative nightmare !!

Correct and I am saying this as an accountant who does this type of return each Yr. Although with ROS you don't need an accountant you just complete the online form and ROS does the rest.

Withholding tax is correct in theory but in practice few if any tenants know or would even do this. Only if the property is managed by a letting agent would this have any possibility of happening.

enricoh

There's a good chance sinn fein will be running the show in a few years time. There's gonna be big potholes to fill to pay for covid, downturn etc imo.
Who better for putting the saddle on than the big bad landlords - that includes you op! As for actually getting your tenants out n you're property back- serious patience will be required!

Baby01032012

Bold Abdu wrote: »

The OP will be non-resident so will only have rental income in Ireland.

There will also be no PRSI as there is a bilateral social insurance agreement between Ire & UK.

No knowledge you say!

They will be ordinarily resident if they leave Ireland for 3 years after they leave will liable to Irish tax on world wide income. Although there income from their trade in Uk will be exempt.

Anyway this isn’t tax forum and these posts including mine have gone off topic.

poisonated

Thanks for the replies.