# rental income - calculate tax due?



## selfbuild (22 Feb 2006)

Hi there,

A quick question in relation to calculating tax due on rental income for an investment property ...

I have a mortgage on an investment property for 160,000 at a rate of 3.5 %. Am renting out the property for 750 euro per month. I am taxed at the higher rate. How do I calculate tax due ... is it ...

rental income = 12 * 750 = 9000
less mortgage interest .......5920 (160000 @ 3.7%)
..................................---------
.....................................3080
less depreciation ..............1250 (FURNITURE - 10000 @12.5% p.a.)
insurance .........................350
..................................---------
.....................................1480

tax on 1480 @ 42% = 621.60

Are my calculations correct?

Also - is there mortgage interest relief I can claim? Any other expenses I can allow?

Thanks 

SB


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## delgirl (22 Feb 2006)

Any of the following expenses incurred:

PRTB registration fee €70 - you should have paid this one!
Repairs & Maintenance
Refuse Disposal
Management Expenses
Advertising
Cable TV/ ESB / Heating Oil or other utilities
Bank Charges (if you have separate account for rental)
Accountancy Fees
Sundry Expenses (such as phone calls, stationery, etc.)

You can't claim mortgage interest relief, but you are correctly off-setting the entire mortgage interest against your rental income.


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## dam099 (22 Feb 2006)

The mortgage interest claimed should be the actual amount charged by the bank not your estimation of same.


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## colc1 (22 Feb 2006)

delgirl said:
			
		

> Any of the following expenses incurred:
> 
> PRTB registration fee €70 - you should have paid this one!


 
What does this (PRTB) stand for? thanks in advance!


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## delgirl (22 Feb 2006)

colc1 said:
			
		

> What does this (PRTB) stand for? thanks in advance!


The Private Residential Tenancies Board - landlords are required to register their tenancies/properties - fee €70 per property/tenancy.


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## seánieboy (22 Feb 2006)

refering to the mortgage interest on the rental property im buying a foreign property and wanted to know how do i offset the mortgage interest paid to the bank if (as they tell me its done at source) or do you get some kind of certificate from the bank telling me what interest was paid and then hand this cert to my accountant to claim it for me


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## colc1 (23 Feb 2006)

seánieboy said:
			
		

> refering to the mortgage interest on the rental property im buying a foreign property and wanted to know how do i offset the mortgage interest paid to the bank if (as they tell me its done at source) or do you get some kind of certificate from the bank telling me what interest was paid and then hand this cert to my accountant to claim it for me


 
Sorry I dont know the answer I would appreciate it too though if someone did know the answer to this


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## ClubMan (23 Feb 2006)

seánieboy said:
			
		

> refering to the mortgage interest on the rental property im buying a foreign property and wanted to know how do i offset the mortgage interest paid to the bank if (as they tell me its done at source)


 If it's done at source then you must be illegally claiming owner occupier mortgage interest tax relief in respect of a non owner occupier mortgage. You need to rectify this situation as a matter of urgency and repay any owner occupier mortgage interest tax relief mistakenly claimed. Then you can offset all interest on any loans used to buy/renovate an investment property against rental income. You really need independent, professional advice if you don't understand any of this. If your existing accountant has access to all this information and has not spotted this spanner in the works then you need to get one who knows his Gluteus Maximus from his Articulatio Cubiti.


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## colc1 (23 Feb 2006)

ClubMan said:
			
		

> If it's done at source then you must be illegally claiming owner occupier mortgage interest tax relief in respect of a non owner occupier mortgage. You need to rectify this situation as a matter of urgency and repay any owner occupier mortgage interest tax relief mistakenly claimed. Then you can offset all interest on any loans used to buy/renovate an investment property against rental income. You really need independent, professional advice if you don't understand any of this.


 
What if you intended to live in the house,i.e. as an owner occupier and then decided you were going to move home with parents or into partners house and rent the property would you have to change your mortgage then to an investor mortgage?  Surely not? I am curious about this now.  Can you offset interest on loans to buy or renovate investment properties against rental income the same way abroad as you can in Ireland


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## ClubMan (23 Feb 2006)

colc1 said:
			
		

> What if you intended to live in the house,i.e. as an owner occupier and then decided you were going to move home with parents or into partners house and rent the property would you have to change your mortgage then to an investor mortgage?


 If you are not or cease to be an owner occupier then you are not entitled to claim owner occupier mortgage interest tax relief and _Revenue _should be notified. Failure to do so means that owner occupier mortgage interest relief is being claimed incorrectly (some would say illegally/fradulently). There may be no need to change the mortgage itself - just the granting of owner occupier mortgage interest relief at source - but chances are the terms & conditions of the loan agreement require any change in circumstances (such as a change in used of the property from owner occupied to rental/investment) to be notified to the lender who may then apply their own approrpriate procedures.


> Can you offset interest on loans to buy or renovate investment properties against rental income the same way abroad as you can in Ireland


 I think so but I could be wrong.


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## DonKing (23 Feb 2006)

> Can you offset interest on loans to buy or renovate investment properties against rental income the same way abroad as you can in Ireland



Yes you can when calculating your tax liability in Ireland. You still of course would have to pay your taxes in the Foreign country which may not allow you to do it.


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## bacchus (23 Feb 2006)

The big element missing in this thread is in which country this investment property is. I think it started in Ireland with selfbuid and move "abroad" with seánieboy...

So, where is it?


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## seánieboy (23 Feb 2006)

the property im going buying is in Budapest in Hungary and i do know that i cant claim mortgage interest relief on this property by releasing equity from my own house which is already paid for but i have been researching that the interest that i pay on my equity release can be off set against my rental income and id just like to know how i do it as interest relief seems to be done at source these days can a certificate be issued like what used to happen before and put it in with youre expences???


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## K-Man (21 Oct 2006)

Dredging up an old post in the hope one of the rental property gurus here can answer me a quick one....

In relation to 'A quick question in relation to calculating tax due on rental income...' the following items were listed as additional deductions :



delgirl said:


> Any of the following expenses incurred:
> 
> PRTB registration fee €70 - you should have paid this one!
> Repairs & Maintenance
> ...


 
Accountancy Fees are listed here as a deduction - does anyone know whether the fees required to complete a personal Tax Return (to correctly file items such as rental income / deductions related to property, but not this exclusively) can be classified and claimed under this deduction ?

Thanks
K


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## extopia (22 Oct 2006)

The OP should note that registration with the PRTB is required and AFAIK you cannot deduct mortgage interest (and possibly other expenses) unless you are registered.


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## asdfg (22 Oct 2006)

> Accountancy Fees are listed here as a deduction - does anyone know whether the fees required to complete a personal Tax Return (to correctly file items such as rental income / deductions related to property, but not this exclusively) can be classified and claimed under this deduction ?


 
No, you need to get a breakdown of how much relates to the rental income.


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