Income tax on rent, worked example, in Ireland
Taxation Researcher | October 23, 2018
| 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: |
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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 |
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| 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.
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