If you are an Irish landlord (or someone who is making some sort income from renting properties) then you’ll need to know what how you are going to be taxed in Ireland. We’ve outlined some of the most frequently asked questions below, but if you need anything else, just get in touch.
How is my rental income taxed?
If you are a PAYE worker and you have additional rental income, you will need to pay tax on it. You will need to take the following steps:
If you have supplementary non-PAYE income of more than €5,000, you must register for income tax and file a Form 11 with Revenue Online Services (ROS) which is available through Revenue’s website www.revenue.ie. A Form 11 can only be filed online through ROS.
If you have supplementary non-PAYE income of less than €5,000, you need to file a Form 12 (PAYE Return). Form 12 can be submitted in paper or electronic form. If you are using an eForm 12 you must have a MyAccount with Revenue in order to file this return online.
Does this include income from Airbnb rentals?
In summary, yes. Income from the following Airbnb rentals is taxable and it is treated differently to standard rental income. You should be aware that the following Airbnb income is taxable:
Income earned by Irish resident hosts on both Irish and foreign listings; and
Income earned by non-Irish resident hosts in respect of Irish listings
Airbnb is legally obliged to supply the below-listed information to the Revenue:
Your first and last name
Address of your listing(s)
Your address as associated with your payout method
Amounts paid out in the reportable year, including cleaning fees
Date of your first booking during the reportable year, by listing
Airbnb provides the report to the Revenue every September and it details the earnings from the previous year. Airbnb has also confirmed it has provided details dating back to May 2014.
What is the rate of tax used for Airbnb rentals?
In summary, the relevant rate of tax is the marginal rate plus the universal social charge and PRSI less allowable expenses. Further details are as follows:
The marginal rate is currently 40% but depends on your circumstances the levels of income vary for each rate e.g. if you are married.
Income earned through short-term lettings in Ireland is not considered to be rental income. This type of income is taxable as either trading income or miscellaneous income.
As a general rule, your income would be considered trading income if the property is available for rent on a frequent and regular basis (rather than a once-off or occasional basis).
What about rental tax expenses?
If your income is deemed to be trading income, a deduction will be available for expenses which have been “wholly and exclusively laid out for the purposes of the trade”. The list is non-exhaustive and might include some of the following expenses:
Cleaning fees
Management costs (such as property management fees)
Insurance premiums
Advertising fees or online commission payments.
Maintenance and repair costs
Utility bills (such as gas, electricity)
Pre-trading expenditure incurred up to three years prior to the commencement of the trade.
However, where your income is treated as miscellaneous income, a deduction is only available for costs “directly incurred” for the provision of the short-term let. This can include, but is not limited to:
Cost of food provided to guests
Advertising fees
Cleaning fees
Reasonable apportionment of utilities (such as gas)
When should I file my tax return documenting my rental income?
For paper filings: The deadline for filing your return and paying the tax liability is 31 October in the year following the tax year e.g. for 2020 the deadline will be 31 October 2021.
Electronic filings via ROS: The deadline for filing your return and paying the tax liability is usually the second week in November. The precise date is confirmed on the Revenue website on an annual basis.
HOW CAN LALOR & COMPANY PROVIDE HELP YOU?
With over 30 years’ experience advising on liquidity, cash flow and debt issues, we are well placed to advise you on the best options available. We have extensive experience dealing with banks and other credit institutions and can help navigate your business through these challenging times.