Tax Tip

02 Feb 2010

Renting Property in Ireland

By Katie Dunbar, FPM Accountants LLP

 

QUESTION

I am a UK resident and I have just purchased a property in the Republic of Ireland which I am going to rent out.  What are the tax implications of this?

 

ANSWER

There are different options an individual can choose when renting property as a non resident landlord in Ireland. 

 

If you receive your rent directly into your bank account, then tax must be deducted by the tenant at the standard rate of tax which is 20% from the gross rents payable.  The tenant must then pay this tax to Revenue Commissioners on behalf of the landlord.  At the end of the year, the tenant must also give a completed Form 185 to the landlord to show that the tax has been accounted for. The landlord can then claim this amount as credit on their annual Tax Return.  Failure to deduct tax leaves the tenant liable for tax that should have been deducted.

 

However, often an individual likes to receive their rents gross, especially for cash flow reasons, and if this is decided then the landlord must appoint a Collecting Agent in the state of Ireland to manage the property.  As the agent is collecting the rents, the rents must be paid gross of tax to the agent.  The agent is then chargeable to tax on the rents and is required to submit an annual tax return and account for the tax due under Self Assessment.   The agent appointed does not need to be a professional person, i.e. it can be a family member or a letting agent or another person prepared to take on the responsibility to make annual tax returns.

 

It is also important to note that each individual with rental in Ireland must also complete a form PRTB for each tenant they have in their properties.  If this form is not completed and the applicable fee paid, landlords will not qualify to reclaim their mortgage interest as an expense when preparing their self assessment tax returns. 

 

This rental must also be shown on your UK self assessment tax return.

 

The advice in this column is specific to the facts surrounding the questions posed.  Neither the Democrat nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.

 

For more details contact:

 

Email:       k.dunbar@fpmca.com

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