Rental income tax queries

Logo

Registered User
Messages
272
I've trawled through various forums on AAM but I'm still confused:( Just wondering if...

Tax on rental income = gross income - (expenses + capital allowances).

USC is charged on rental income after capital allowances but before expense deductions.

Assuming on the higher tax rate during 2015, the taxable rental income will incur 52% tax
(41% income tax + 4% PRSI + 7% USC) in 2016.

Thanks in advance,
Logo
 
No, other way around.

USC is charged on rental income less expenses before deduction of capital allowances.
 
I've trawled through various forums on AAM but I'm still confused:( Just wondering if...

Tax on rental income = gross income - (expenses + capital allowances).

USC is charged on rental income after capital allowances but before expense deductions.

USC is charged on rental income after expense deductions but before capital allowances.

income tax 40%
PRSI 4%
USC 7%
 
Thanks for the prompt replies!
Does that mean that if I incur an expense that is not a capital allowance then it is fully tax deductible (without costing tax, PRSI or USC).
 
e.g. Rent is €2,000, fixing a door costs €200, service charge is €100, accountant charges you €200 for your return, and a new washing machine costs €400.

All deductible, except for the €50 capital allowance on the washing machine which is deductible for income tax and PRSI purposes but not for USC purposes.
 
Assuming rent = €19200 for two house lets.
Expenses = €6530
C/A = €16000 (i.e. €2000 over 8 years)

Tax due:
Income - Expenses => 19200 - 6530 = 12670
USC 0n 12670 @ 7% = 887
Tax & PRSI on 12670 @ 44% = €5575
Total tax due = (5575 + 887) - 2000 = 4462.

The above is probably incorrect so any help is appreciated.
Thanks in advance.
 
Last edited:
Hi Logo,

Tax due:
Income - Expenses => 19200 - 6530 = 12670
USC 0n 12670 @ 7% = 887
Tax & PRSI on (12670-2000) @ 44% = €4695
Total tax due = 4695 + 887 = 5582.

You need to deduct the capital allowances before calculating tax, not after.
 
Thanks Mrs Vimes for that helpful information. Do you know a loss from the previous year is treated i.e. do I subtract the loss from rental income first?

Thanks in advance
 
AFAIK you can subtract losses forward in the same way as capital allowances but I am not an accountant!
 
Back
Top