Relief on rental income - end of rental

[fisher]

I have been renting out a property for a number of years. The tenants have left and I am now selling the property.

When calculating tax relief on rental expenses (e.g. insurance premium, management company fee) for the final year, are allowed expenses calculated pro rata for the period until the tenancy ended OR can I claim full relief if the expense was incurred during the period of the tenancy? For example, if I paid insurance for a year 6 months before the tenancy ended, can I claim relief on the full premium or just 50% of the premium?

 

[DannyBoyD]

IANATE

All your expenses are applied to all your rental income for the year. Its not pro rata

 

[AAAContributor]

if I paid insurance for a year 6 months before the tenancy ended, can I claim relief on the full premium or just 50% of the premium?

1 Jan 2024 - Annual insurance premium of €1,000 is paid.

30 Jun 2024 - Tenancy ends

31 Jul 2024 - Property is sold and insurance cover ends. Refund from insurer of 5 mths cover is received of €417.

"Full premium" for 2024 = €583 (€1,000 less €417).

For the purposes of calculating the deductible insurance expense for 2024 for income tax purposes, apportion by the number of months the property is let, so therefore it's €583 x 6/7 = €500.

 

[DannyBoyD]

It would be my understanding that you don't exclude expenses just because you have a void period in your rental?

Example:
Property is insured from Jan to Dec.

Tenants vacate in March.

Property redecorated in April.

New tenancy starts in May.

I expect to claim the full insurance premium against my total rental for the year. Not 11/12ths of the premium.

 

[fisher]

Tenants vacate in March.

Property redecorated in April.

New tenancy starts in May.

I expect to claim the full insurance premium against my total rental for the year. Not 11/12ths of the premium.

The key difference in my case is that I’m selling, not starting a new tenancy. Expenses between successive rentals are allowed.

 

[fisher]

For the purposes of calculating the deductible insurance expense for 2024 for income tax purposes, apportion by the number of months the property is let, so therefore it's €583 x 6/7 = €500.

Thanks! Great example.

 

[T McGibney]

IANATE

All your expenses are applied to all your rental income for the year. Its not pro rata

This is incorrect.

 

[torblednam]

This is incorrect.

Ah to be fair, the first bit was correct - they are not a tax expert

 

[T McGibney]

Ah to be fair, the first bit was correct - they are not a tax expert

Mindboggling how many hapless Have A Go Heroes we have around here.

 

[DannyBoyD]

Mindboggling how many hapless Have A Go Heroes we have around here.

See post no. 4 in reference to voids.

Equally mindboggling the number of key board warriors we have.

 

[T McGibney]

See post no. 4 in reference to voids.

This query clearly doesn't relate to a void.

Equally mindboggling the number of key board warriors we have.

Inappropriate.