Income tax on rental property

We bought in Dublin at the end of 2005 and like many have rented this property out while we rent a property in the country. We are receiving rent of €1400 while our mortgage repayments are just under €1000. Therefore as we are making a profit on the property we are being stung for Income tax each year even with all the deductions. Our tax liability for 2014 is €3000. My question is, if we were to increase our monthly mortgage repayments would this decrease the tax we would owe or would it make any difference from a tax point of view? Thanks for advising

It would make no difference.

75% of the INTEREST charged on the mortgage is tax deductible.

Capital repayments are not.

In fact by overpaying your mortgage you would reduce your capital outstanding and therefore the future interest charge. Thus increasing your tax bill in future years.

You are not by any chance doing your own tax return and deducting the entire mortgage payment ?

BridgeF,
You can only currently offset 75% of the interest on your mortgage against income earned ie rental income on your property.
Increasing the monthly payments would most probably only make sense if you have a variable rate mortgage that charges more than you can make investing the funds elsewhere.
Like all us landlords you will continue to be taxed heavily. Thats why so many are jumping ship.

N/A

cremeegg said:

It would make no difference.

75% of the INTEREST charged on the mortgage is tax deductible.

Capital repayments are not.

In fact by overpaying your mortgage you would reduce your capital outstanding and therefore the future interest charge. Thus increasing your tax bill in future years.

You are not by any chance doing your own tax return and deducting the entire mortgage payment ?

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THanks cremeegg for this info. Yes doing our own tax return but have been deducting the 75% allowable interest

How much of your mortgage repayment is capital and how much is interest. It would seem that the rent is paying your capital and at the end you will own an asset. If you're lucky most of the income tax is also coming from the rent.