Overseas Rental income Tax

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ctlsleh

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I am thinking of buying an Appt in Portugal and renting it out to pay the mortgage.

Can anyone advise the tax implications?

I’m not looking to make a lot of profit, happy to pay the mortgage albeit I expect to have to top it up.

I know there are some taxes required in Portugal, not sure of the details.

do I also need to declare that here and what are the implications?

thanks!
 
Yes, you need to declare the rental income and profit, if any, both in Portugal and Ireland. Any profits will be taxed in both countries. The rules for calculating rental profit may well be different in the two countries so you could have a profit in Portugal and a loss in Ireland or any combination of this.

Some, all or none of any tax you pay in Portugal may be taken into account in Ireland and count as a tax credit.
 
jpd said:
Yes, you need to declare the rental income and profit, if any, both in Portugal and Ireland. Any profits will be taxed in both countries. The rules for calculating rental profit may well be different in the two countries so you could have a profit in Portugal and a loss in Ireland or any combination of this.

Some, all or none of any tax you pay in Portugal may be taken into account in Ireland and count as a tax credit.
Click to expand...
On the some all or none, how is that determined if you don’t mind me asking?
 
The Revenue in Ireland calculate what tax you would pay in Ireland without taking into account the tax paid in Portugal. This will give you an Effective Irish Tax Rate of x%

If the % tax rate you pay in Portugal is less than this, then the full amount paid is allowed as a credit.
If the % tax rate you pay in Portugal is higher, then only a proportion of the tax paid is allowed

Your foreign net income is grossed up using the Effective Irish Tax Rate and then the tax allowed is calculated. It's complicated
 
Thanks jpd, I’m not quite following you.
Here’s my assumption.

If i had rental income post expenses of 1,000 Euro. I would need to pay 28% in Portugal for their rental income tax = 280
I assume i would then have to pay 52% in Ireland on the 720 = 375 leaving me about 345 income.

Does that sound about right?
 
It all depends on your overall tax situation in Ireland

You don't pay Irish tax on the net income after Portuguese tax but on the net income with a credit for the tax paid in Portugal.

At best, all of the 280 will be allowed so your tax in Ireland would be 1,000 x 52% = 520 less the 280 in Portugal = 240. So 520 in total
The credit of 280 could be lower - for example only 220 in which case you would end up paying 520 - 220 = 300 in Ireland plus the 280 in Portugal = 580
 
Also the expenses allowed in Portugal to arrive at the net income are not necessarily the same as those allowed in Ireland to arrive at the net income. The net income could be different in the two countries
 
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