If you rent out property in Ireland, the rental income you receive is taxable. It is added to your other income and taxed at your marginal rate of income tax, plus USC and PRSI. However, you can deduct a range of expenses to reduce the taxable profit. Understanding what you can claim and your obligations as a landlord is essential to staying compliant with Revenue.
How Rental Income Is Taxed
Rental income is treated as investment income and is taxed at your marginal rate. For most landlords who also have employment income, this means rental profits are taxed at the higher rate of 40%, plus USC (up to 8%) and PRSI (4%). The combined marginal rate can reach 52%.
Your taxable rental profit is calculated as: Gross rental income minus allowable expenses.
Allowable Deductions
You can deduct the following expenses from your rental income:
- Mortgage interest: 100% of mortgage interest on the rental property is deductible (the property must be registered with the RTB).
- Repairs and maintenance: Costs of repairs, painting, plumbing, and general maintenance. Note: improvements or enhancements are not deductible as revenue expenses but may qualify for capital allowances.
- Insurance: Building insurance, landlord insurance, and contents insurance.
- Management fees: Fees paid to a property management company or letting agent.
- Accountancy fees: Fees for preparing your rental accounts and tax return.
- Legal fees: Costs of drawing up a lease or for rent collection.
- Advertising: Costs of advertising the property for rent.
- Wear and tear: A deduction of 12.5% per year for 8 years on the cost of furniture, fixtures, and fittings provided with the property.
- Service charges: Management company fees, refuse charges, etc.
- LPT (Local Property Tax): Can be deducted as an expense if paid by the landlord.
Pre-Letting Expenses
If you incur expenses in getting a property ready to let for the first time (or after a period of vacancy), certain pre-letting expenses are deductible. This includes repairs, insurance, and advertising costs incurred in the 12 months before the property is first let, subject to a maximum claim of €5,000.
Registration with the RTB
All private residential tenancies must be registered with the Residential Tenancies Board (RTB) within one month of the start of the tenancy. Failure to register means you cannot claim mortgage interest as a deduction against your rental income. The registration fee is €40 per tenancy.
Rent-a-Room Relief
If you rent out a room (or rooms) in your principal private residence, the first €14,000 of rental income per year is exempt from income tax, USC, and PRSI. If your rental income exceeds €14,000, the entire amount becomes taxable — not just the excess. This relief does not apply to short-term holiday lets through platforms like Airbnb.
Filing Requirements
Rental income must be declared on your annual tax return. PAYE employees with rental income should file a Form 12 (or Form 11 if self-assessed). You must also pay preliminary tax on your rental income, which is due by 31 October each year.
Key documents to keep:
- Rental agreements and leases
- Receipts for all expenses claimed
- Mortgage statements showing interest paid
- RTB registration confirmation
- Records of any periods when the property was vacant
Non-Resident Landlords
If you are tax-resident outside Ireland but own rental property in Ireland, your tenant (or collection agent) must deduct tax at 20% from the rent and pay it to Revenue. You can then file a tax return to claim any additional reliefs or deductions you are entitled to.
Small Benefit Exemption for Landlords
The government has introduced a relief for landlords who commit to renting their property for a minimum period. Where applicable, this can provide income tax relief on a portion of the rental income. Check the latest Revenue guidance for current qualifying conditions and limits.
Final Thoughts
Being a landlord in Ireland involves significant tax obligations, but the range of deductible expenses means your actual tax bill can be substantially lower than the headline marginal rate suggests. Keep thorough records, register with the RTB, file your returns on time, and consider professional advice to ensure you are claiming all the deductions you are entitled to.