How is rental income taxed

S

Sharky

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Hope someone can help with 2 questions.

Considering buying a house to rent out but not 100% on how the rent received is taxed. Joint owners and both paye workers in the higher bracket.

If rent received per month was €1200 and the repayments were €1000 how do you work out how much we would pay.

Also do you pay tax on the sale of an investment property?

Thanks in advance
 
Last edited:
Rental income is taxed under Case V schedule D.

The total rent received or receivable is assessed.

You are entitled to deduct expenses related to the property such as 75% of the mortgage interest if registered with the PRTB. Repairs, insurance, letting fees. Capital allowances are available on fixtures and fittings @ 12.5%.

So let's say your rent is €1,000 per month and you borrow €150k @ 5% allowable interest €5,625, insurance €300, letting fees €300, accountants fees €300.

Your assessable profit is €5,475. This is subject to tax on each partner PRSI and USC at 49.5% if your PAYE income exceeds €33,800.
 
The returns are self-assessed and can subsequently be audited by Revenue.

The penalties for under-declaring your income are substantial.
 
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