Income tax on rent, worked example, in Ireland

Taxation Researcher | January 20, 2022

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%
Thanks to:
Grant Thornton Ireland

Notes


Grant Thornton Ireland is a member firm of Grant Thornton International. Grant Thornton International is not a worldwide partnership. Member firms of the international organization are independently owned and operated.

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.

INCOMTE TAX 2015 FOR MARRIED PERSONS, SPOUSE WITH INCOME

TAXABLE INCOME, IRR (US$) TAX RATE
Up to € 69,100 20%
Over € 69,100 40% on all income over €69,100

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.