Tax on Foreign Rental Property (UK) and Allowable Expenses

Andrew365

Registered User
Messages
108
Hi,

I became domiciled and tax resident in Ireland as of 2019, I have a rental property in the UK with a mortgage which I rent out on a full time basis. I am trying to work out my tax liability in Ireland, there is an example here on revenue website for foreign rental income. The example is based on a higher rate tax payer as follows

- ( Irish Income + Foreign Income ) * 40% = Total Tax Due
- Foreign Income / Total Income = % of Foreign Income
- % Of Foreign income * Total Tax Due = Tax due on foreign rental income

- (90k + 10k) *0.4 = 40k
- 10k / 100k = 10%
- 10% * 40K = 4k = Tax due on foreign income

This seems a bit too simple as I thought I would also have to pay PRSI / USC on it similar to a resident landlord and it also taxes entire income at 40%. Has anybody direct experience of this?

My second question is that an allowable expense is for Property Management, currently my father does this for free but if I were to start paying him a monthly fee, as long as he declares the income on his tax returns it is fine or do I have to pay a registered firm?
 

Leper

Frequent Poster
Messages
859
The Irish tax system regarding rent from property obtained in other countries is complex. You should only be paying tax on the income minus expenses (i.e. actual profit). However, our Revenue Commissioners don't see it this way. Get advice from a sound accountant and have him/her return your total income. It will cost you a few bob, but will save you lots on worries.

If you wish to go it alone, then consult the Revenue website and best of luck.

(Thinking out loud - Get a Tax Accountant on board and fast).
 
Last edited:

noproblem

Frequent Poster
Messages
1,747
Furniture, etc, is treated as a depreciating asset over 8 years, ie, at 12.5% per year. Management fees and all other expenses are allowable against tax. PRSI has to be paid as does USC
 

Andrew365

Registered User
Messages
108
The Irish tax system regarding rent from property obtained in other countries is complex. You should only be paying tax on the income minus expenses (i.e. actual profit). However, our Revenue Commissioners don't see it this way. Get advice from a sound accountant and have him/her return your total income. It will cost you a few bob, but will save you lots on worries.

If you wish to go it alone, then consult the Revenue website and best of luck.

(Thinking out loud - Get a Tax Accountant on board and fast).
Agree and that is my plan, I just like to do some research so I have some knowledge when discussing. Have you any recommendations?


Furniture, etc, is treated as a depreciating asset over 8 years, ie, at 12.5% per year. Management fees and all other expenses are allowable against tax. PRSI has to be paid as does USC
Regarding PRSI and USC, I am not sure when it comes to foreign property. It clearly states it is due for property in Ireland but the revenue website for foreign property income just states it is 40%, perhaps they haven't updated it. I hope it is not the case.

In my opinion it is a bit of a joke the tax on it here locally, it is much higher than the UK would charge if I lived there. If I have to pay USC and PRSI on it, it would actually be marginally cheaper to kick the tenant out and just service the mortgage myself.
 

Gordon Gekko

Frequent Poster
Messages
3,644
Are you British? Just in the context of your “I recently became Irish resident and domiciled” comment; one doesn’t just become Irish domiciled. And if you’re non-domiciled, the UK rental income will only be taxable in Ireland if brought into Ireland.

Paying your Dad to manage it and him raising an invoice is fine.
 

Andrew365

Registered User
Messages
108
Are you British? Just in the context of your “I recently became Irish resident and domiciled” comment; one doesn’t just become Irish domiciled. And if you’re non-domiciled, the UK rental income will only be taxable in Ireland if brought into Ireland.

Paying your Dad to manage it and him raising an invoice is fine.
I am a man of many nationalities, it depends what day you ask and what football team is playing :p .

Joking aside I hold both a British / Irish passport thanks to the Good Friday Agreement, my UK property is in the North where I grew up. I had been working abroad and have moved to Dublin and am employed.

I was advised previously by Tax Accountants that I would only have to pay tax on it if I brought it into Ireland. I then did some more research that made me think I am domiciled here now but I guess I could argue that I intend to move back to the UK eventually.
 

Bronte

Frequent Poster
Messages
13,461
Domicile is a very complex legal concept. And it's very hard to lose your domicile of origin. My best guess is that you are UK domiciled as you were born in NI, currently part of the UK.

In this context your support of a foot ball team would not be relevant. More like where you intend to live in the future and where you want to be buried.
 
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