Tax on Rental Income

[Rent$ Man]

Dear All,

Hopefully you will be able to assist with a tax related query.

I am a married male with a young baby. I own an apartment in Dublin, which I have recently rented out in order to move someplace with more room for raising a family. I am currently renting a family home elsewhere. The basic financials of my scenario are as follow:

Rent received from apartment per annum €11,400
Less allowable costs (€5,100)
Taxable Income €6,300
Tax payable (@ say 50%) €3,150

In addition to the allowable costs in my calculation above, I have non-allowable costs of an additional €7,850 i.e. the capital element of my monthly mortgage repayments. My net cash position in relation to the apartment for the full year can be summarized as follows:

Rent Received from Apartment per annum €11,400
Less allowable costs (€5,100)
Less non allowable costs (€7,850)
Less tax payable (€3,150)
Net Outflow (€4,700)

I pay an annual rent for the new rented house I am living in of €15,600.

My reading of the current tax requirements is that I am not able to avail of any rent relief/ rent credit on the amount I pay for the rented accommodation, to offset the tax payable on the rented accommodation i.e. €3,150. Is this correct? I would be delighted if there is something that I am missing out on and that I can reduce my tax liability arising on the ‘profit’ from my rented apartment.

Are there any proposals to deal with such scenarios under the upcoming budget?

Thanks very much for taking the time to read and consider this.

All the best,

Rent$Man

 

[DB74]

Is the €5,100 the total interest on your mortgage for the year?

If so then only 75% of this is allowed as an expense and not the full 100%

You are correct that the rent you pay cannot be used to reduce your taxable rental income. You may be entitled to a rent tax credit though if you commenced renting prior to 07-Dec-2010. Otherwise you get nothing.

http://www.revenue.ie/en/tax/it/credits/rent-credit.html