Rental Income

Friday 22nd August 2014 - Moore Accountants

Rental Income:- A taxation guide re Residential Lettings

A person who has rental income has to make a tax return each year and include this income in his/her Income Tax return. The tax return for 2019, for example, must be submitted between 1 January and 31 October, 2020.

The following are the main items which are allowable as a deduction to reduce Income Tax liability:-

  • Interest [see later]
  • Insurance
  • Management charge
  • Legal costs [arranging letting]
  • Private Tenancy Board costs
  • Light & Heat paid by landlord
  • Repairs [see later]
  • Accountancy
  • Cleaning
  • Any other costs that relate to keeping the property in a lettable condition.

Tax Traps:-

  • All residential lettings must be registered with the Private Tenancy Board. Details at If this is not done, the interest is not allowable as a deduction. If interest is not allowable, then a sizable tax bill can follow
  • Only 75% of interest is allowable as a deduction.
  • The capital repayments is not a deduction against Income Tax.
  • Capital Costs, eg a new roof, new doors and windows are not allowable as a deduction against rental income. Rather these costs are added to the original cost of the property and this becomes the base costs for Capital Gains Tax
  • Rental properties need to have an energy rating, called a BER certificate.
  • Where new equipment is bought for the property, 12.5% is allowed for each year over 8 years as a deduction against rental income. Examples:- washing machine, bed etc.
  • Local Property tax [previously NPPR] must be paid in respect of each rental property.
  • Water charges will be introduced shortly.

Tax Tips:-

  • Keep all relevant receipts.
  • Ensure that the insurance in place is specifically for rental properties.
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