I have seen a few references to/questions on this topic, & thought l’d put this in a new thread rather than bolting onto another where it mightn’t be seen by others.
I have been through this with both Revenue & RTB - I’m renting to a close relative at below market rent. I called Revenue to clarify position & those on the line didn’t know, so they suggested putting the query in writing, which I did. 7 weeks later (2 weeks ago) I got a response. I got instant clarification from RTB in May. I was concerned about things I had read about non-deductibility of expenses where rental income is uneconomic. I thought this inequitable, if I had to pay tax on the (reduced) income, & feared I wouldn’t be able to deduct expenses from that. 2 key points
1. On the reduced profit generated by the ‘uneconomic rent’ Revenue replied that
“In the Guide to Rental Income under the section What expenses are not allowed?....it states:-
You cannot deduct the following expenses when you are calculating your rental profit or loss:
" expenses on premises rented out on an uneconomic basis, where it is not possible to make a profit from the rent received”.
That’s all they wrote. From this I am taking that if you are still generating a profit (which you likely are, albeit reduced) this is ok, & the expenses are deductible. If you are generating a loss, you will be challenged & they will not be deductible.
Separately the relative would be taking a gift equivalent to the difference between rent paid & market rate, & that would have to be declared for Capital Aquisitions Tax (note Eur3,000 exemption).
“You may receive a gift up to the value of €3,000 from any person in any calendar year without having to pay Capital Acquisitions Tax (CAT). This means that you may take a gift from several people in the same calendar year and the first €3,000 from each disponer is exempt from CAT.”
2. RTB were very helpful - they explained that if you are letting to family member you do not have to register the tenancy (NB relevant in Rent Pressure Zones where property is technically not rented for 2 years etc). RTB even suggested that I apply for a refund for the RTB registration fee I paid for this tendency with ‘uneconomic rent’.
Hope this helps.
I have been through this with both Revenue & RTB - I’m renting to a close relative at below market rent. I called Revenue to clarify position & those on the line didn’t know, so they suggested putting the query in writing, which I did. 7 weeks later (2 weeks ago) I got a response. I got instant clarification from RTB in May. I was concerned about things I had read about non-deductibility of expenses where rental income is uneconomic. I thought this inequitable, if I had to pay tax on the (reduced) income, & feared I wouldn’t be able to deduct expenses from that. 2 key points
1. On the reduced profit generated by the ‘uneconomic rent’ Revenue replied that
“In the Guide to Rental Income under the section What expenses are not allowed?....it states:-
You cannot deduct the following expenses when you are calculating your rental profit or loss:
" expenses on premises rented out on an uneconomic basis, where it is not possible to make a profit from the rent received”.
That’s all they wrote. From this I am taking that if you are still generating a profit (which you likely are, albeit reduced) this is ok, & the expenses are deductible. If you are generating a loss, you will be challenged & they will not be deductible.
Separately the relative would be taking a gift equivalent to the difference between rent paid & market rate, & that would have to be declared for Capital Aquisitions Tax (note Eur3,000 exemption).
“You may receive a gift up to the value of €3,000 from any person in any calendar year without having to pay Capital Acquisitions Tax (CAT). This means that you may take a gift from several people in the same calendar year and the first €3,000 from each disponer is exempt from CAT.”
2. RTB were very helpful - they explained that if you are letting to family member you do not have to register the tenancy (NB relevant in Rent Pressure Zones where property is technically not rented for 2 years etc). RTB even suggested that I apply for a refund for the RTB registration fee I paid for this tendency with ‘uneconomic rent’.
Hope this helps.
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