Dual tax for UK rental income in Ireland

Hi,

I'm a UK citizen, moved for jobs to Ireland last year, so I'm a resident there, and rented out my place in UK, so I have an income there.
I am going to pay tax for my UK house income in UK, but was wondering if that also has to be declared in Ireland?

Under the double taxation treaty, rental income is taxable by the country where the property is - so yes, yopu are liable to UK tax as you say.

You will also have to declare this rental income to the Revenue in Ireland but you can claim credit for tax paid on this income in the UK. The amount of credit depends on a number of criteria so it is not possible to say whether you will get credit for the full amount paid in the UK or only partial credit

As far as my knowledge goes:

Assuming you have spent more than 183 days in Ireland for 2020, you are tax resident in Ireland in 2020, and assuming you are UK domiciled, then you are taxed on Irish source income and foreign income remitted to Ireland.

As a non-Irish domiciled person, you can avail of the 'Remittance Basis of Taxation'.

Thus, your UK rental income should fall outside the charge to tax in Ireland provided none of the funds are remitted to Ireland.

If you are not remitting any foreign rental income to Ireland, then there is nothing to declare under Schedule D Case III for income tax.

In other words, continuing the point by AAAContributor, if you keep you UK income in the UK
You can spend it when you're there
No Irish tax liability

Many thanks all

Obviously the point about ensuring you keep the rental income in a separate account to avoid anti-avoidance provisions is extremely important here or you will trip yourself up.

Of secondary consideration is that U.K. capital gains tax continues to apply to U.K. situs assets whereas if you sold the property, it would be possible to restructure so that no tax is payable in either the U.K. or Ireland

@Marc If you had sold UK property whilst non-domiciled but an Irish resident, when calculating tax due on a remittance basis. Can you factor in exchange rate movements? For example, the house was purchased in 2010 for GBP 100,000 an equivalent EUR 140,000, it was sold in 2020 for GBP 120,000 equal to EUR 110,000. Thus from a EUR perspective the house did not make a profit.

If the above is not possible, is full tax due on a partial remittance? For example post clearing mortgages and costs there was GBP 60,000 left but if only GBP 20,000 was transferred to Ireland is the full tax due? Lastly, if the remittance occurred in December when would the tax be due, October 21?

The property is in the U.K. so U.K. CGT rules apply. The Euro exchange rate has no bearing on the calculation.

If you sold the property and U.K. tax paid (even if no liability) then you would have clean capital which you could bring into Ireland free of Irish tax.

Marc said:

The property is in the U.K. so U.K. CGT rules apply. The Euro exchange rate has no bearing on the calculation.

If you sold the property and U.K. tax paid (even if no liability) then you would have clean capital which you could bring into Ireland free of Irish tax.

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Thanks but I thought as I'm a resident in Ireland and disposing of foreign property that tax is due in Ireland net of tax paid in the UK.

Yes as I set out in my blog post, the best outcomes are typically achieved by planning ahead.

UK PPR is exempt from CGT but a rental property is full taxable in the U.K. to both income tax and CGT.

we conclude that for many people the rational course of action is to sell their property in the U.K. when moving to Ireland and certainly before becoming Irish tax resident.

sadly however, you seem to have been in Ireland for a year or two and therefore there is some back fill that you need to consider and some trade offs to consider that will require some additional tax advice.

I’d speak to KTA.ie for guidance on the issues and your options, you may conclude that you just keep the house and deal with being an absentee landlord in the teeth of Brexit

Thanks Marc,

Yes, unfortunately, I held the property as an investment whilst living outside of the UK and prior to moving to Ireland for work. With a departing tenant in 2020 I decided to sell the property, so that is done and dusted. The UK tax was minimal but paid, and now the issue is what to do tax-wise prior to remitting to Ireland! Thanks I'll look into KTA.