Does an Irish tax shelter cover UK rental income ?

[dovest]

I have a Section 23 type tax shelter which is not "ring fenced" and I use it to shelter my taxable Irish rental income from tax. Now I am considering a property investment in the UK. Most of the rental income from this new UK property will be taxable, as I will have little allowable expenses and a low mortgage.

My questions are:

1) Will I have to pay UK income tax on the taxable rental income which originates in the UK?

2) When I calculate my Irish tax (having taken account of the tax already paid in UK, there may be some additional tax payable in Ireland), will my Irish tax shelter be usable to shelter the additional tax payable to the Irish Revenue?

 

[bazermc]

I have a Section 23 type tax shelter which is not "ring fenced" and I use it to shelter my taxable Irish rental income from tax. Now I am considering a property investment in the UK. Most of the rental income from this new UK property will be taxable, as I will have little allowable expenses and a low mortgage.

My questions are:

1) Will I have to pay UK income tax on the taxable rental income which originates in the UK? Yes as the property is UK situate but you may get relief under the Irish/UK double taxation agreement by way of a credit for UK tax paid against the Irish tax due on UK rent under the DTA the UK have taxing rights over a UK property

2) When I calculate my Irish tax (having taken account of the tax already paid in UK, there may be some additional tax payable in Ireland), will my Irish tax shelter be usable to shelter the additional tax payable to the Irish Revenue?

Unfortunately not, the section 23 relief may only shelter Irish source rental income

 

[San Martino]

Although you cannot make use of the section 23 allowances, you will be entitled to personal allowances (of around £4k per annum? - check the Inland Revenue website for exact amounts), and the initial tax rate is only 10%. So depending on how much net income you are generating from the UK, it may not be a big issue

 

[dovest]

Thanks for the advice San Martino; I will definitely welcome a £4k TFA and if my Wife is a co-owner, maybe it will be £8k !

Incidentally, does anybody know whether the UK system has an equivalent to Section 23 ?

 

[Smi1er]

Thanks for the advice San Martino; I will definitely welcome a £4k TFA and if my Wife is a co-owner, maybe it will be £8k !

Incidentally, does anybody know whether the UK system has an equivalent to Section 23 ?

SM is wrong I'm afraid. Although the income is from the UK it will be taxed in Ireland so you do not get the £4K allowance.

You will be able to offset expences (mortgage interest etc) against the income.

TBH the UK is not good at the moment for property investment. Interest rates are on the up and the inflation forecast isn't good.

The property bandwagon left an awful long time ago.