Help with income tax on rental property

Hi There,

we are looking to move out of our apartment to a rented house, but I need some help figuring out the tax liability on the rented property, so any help would be much appreciated. We own a two bedroom apartment in the city centre, which will hopefully be easy enough to rent out.

Details:
Current mortgage: €700 a month
Interest paid in a year: €1000 approximately (need to find out exact amount)
Salary 1: €40,000
Salary 2: €28,000

My partner will probably give up work when we rent out the apartment due to child care costs being higher than his salary on a monthly basis. So I would imagine our gross salary for 2013 will be approx €40,000. We are currently taxed as a couple, would it make any difference to be taxed separately?

Rental details:
Rent: €1,000
Management fees: € 1500 annually
Insurance: €400 annually

What is the total tax liability of the rental income if we both work and have an income of €68,000 annually and what would the tax liability be if only I continue to work and earn €40,000? Is there a difference in the tax rate and what’s the best way to deal with this?

Also, how do I calculate the tax relief of Repairs & maintenance and annual wear & tear?

Many thanks in advance!!!

stuckinflat said:

My partner will probably give up work when we rent out the apartment due to child care costs being higher than his salary on a monthly basis.

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That may not be a good idea even if financially it makes little difference.

There's a lot to be said for being in paid employment of any description, not everyone is cut out for staying at home etc.

Re tax, have you looked at the threads on here on renting ? Basically any 'profit' will be taxed at the highest income tax rate you are paying.

It might be a good idea to hire an accountant if you're unsure of how tax is calculated.

Check this post out from previous. As you will be in the 41% bracket whether your partner works or not it will make no differance on how much you will pay.