Income tax on rent, worked example, in Ireland

Non-resident couple´s rental income1
Annual Rental Income2		1,500	6,000	12,000
Annual Rental Income		18,000	72,000	144,000
Less Expenses3	20%	(3,600)	(14,400)	(28,800)
Less Depreciation4		(5,357)	(16,071)	(35,573)
= Taxable Income		9,043	41,529	79,627
Income Tax
Up to €67,000	20%	1,809	8,306	13,520
Over €67,000	40%			4,211
Annual Income Tax Due		1,809	8,306	18,031
Additional Tax
Health Levy	2%	-	-	1,593
Annual Income Tax Due		1,809	8,306	19,923
Deductions
Withholding Tax	20%	(3,600)	(14,400)	(28,800)
Net Annual Tax Due		(€1,791)	(€6,094)	(€9,177)
Tax Due as % of Gross Income		10.05%	11.54%	12.52%
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Notes

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¹ The property is jointly owned by husband and wife. Currently, lettings of less than ten years are exempt from VAT. It is possible to waive this exemption and if a ´waiver´ is applied for, VAT should be charged at 23% on the monthly rents.

² Rental income paid to a non-resident landlord is subject to 20% withholding tax. This tax is then available as a tax credit when the couple files their annual income tax return.

³ Estimated values. Income-generating expenses are all deductible from the gross rental income.

⁴ Capital allowances may be available on the cost of any fixtures and fittings provided with the building and the deduction is given over eight years (e.g. 12.5% per annum).

⁵ These income tax rates are applicable to a married couple with two incomes. A different set of tax bands is applicable for the following classification of taxpayers: single person, married couple with one income, one-parent family.

⁶ The 2% health levy is levied on the taxable income over €22,880 of each taxpayer. Once this threshold is exceeded, the health levy is applied on the whole taxable income.