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- Pre-Letting expenses: Expenses incurred before the property is let for the first time by the owner are not tax deductible. Certain pre-letting expenses are allowable e.g advertising costs, legal fees. Once a tenant is in place expenses can be deducted.
- Expenses incurred in-between lettings are fully deductible.
- Property owners to set up a special bank account for all income and expenses relating to the property.
- Property owners should have a written lease in place with tenants.
- All new tenancies need to be registered with the RTB otherwise the property owner may not be entitled to a deduction for mortgage interest. If the tenant stays four years in the property, the tenancy has to be registered with the RTB.
- A deduction for mortgage interest incurred on borrowings is only available where the borrowings have been used for the purchase, repair or improvement of the investment property. Hence, any non-allowable element of borrowings should be reviewed.
- Establish the original cost of the fixtures & fittings in the property. A tax deduction can be claimed on fixtures & fittings at 12.5% over 8 years. Make sure an itinerary of the fixtures & fittings in the property has been done before letting a property.
- Members should be aware rental income is taxable on a receivable basis i.e. what you are entitled to receive as per the lease rather than what was actually received. Any unpaid rent, if not recoverable, can subsequently be written off as bad debt and a refund can be claimed for any tax paid on it.
- If you are a non-resident landlord, 20% of the rental income should be deducted and submitted to Revenue
- Where TRS is being claimed on a property being let, this should be deactivated.
- The owner of the property is still liable to pay the Local tax each year
- Property Owners should set up a special property file and maintain records in respect of expenses incurred as taxpayers are required to hold valid receipts for any expenses claimed for a period of 6 years expenses.
- Where the owner previously lived in the property as a principal private residence and subsequently rents out the property, the Capital Gains Tax implications should be considered.
- Landlords will need to register for Income tax as rental income is a non-PAY source of income and file an annual tax return.