Income tax on rental income which doesnt cover mortgage payment?

V

Vegas2000

Guest
hi all

I have looked on revenues website and a few other websites and i cant seem to find a definite answer to my query.
I am looking into renting out my apartment and based on current rents around the area, the rent I charge will not cover my mortgage repayments ie the rent will be €900 and my mortgage repayment is €1150

Does income tax apply in my case where I will not be actually making any profit on my rental property?

thanks
 
Yes depending.. You can writeoff expenses like insurance, management fees etc from the rental and 75% of the mortgage interest... If there's anything left over after that you pay tax on it.. For eg you earn 10,000 from your rent. Mortgage interest for the year is 10,000. You can deduct 7500 ( 75% of mortgage interest) from your rental which leaves 2,500 which is taxable. Then take away the other allowable expenses lets say there's about 1000 there. Take that off the 2,500 leaving 1500 which is then taxed. Hope that makes sense...
 
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As Lucozade says, the answer is yes. Revenue considers all rental income to be taxable after permitted deductions as Lucozade posted. It regularly surprises me that people think no tax is due if the mortgage payments are higher than rental income. If that was the case we'd all be adjusting our mortgage repayments to be €1 above the rent! Renting property is not the easy fix lots of people think it is. www.irishlandlord.com is a useful site for landlords with very helpful info.
 
Bronte said:
Yes it does. Are you sure you want to become a landlord? Have you thought of other options.
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Adding to Bronte's thoughts, what will you do if the tenant fails to pay the rent on time (or at all), wrecks the property etc. Because "renting" is considered a business, you must know all the laws and adhere to them or you may incur hefty fines or damages awarded to tenants. Then, there are void periods to be accounted for, plus NNPR, Household charge, possible agents fees etc.
 
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