Letting Properties - Paying tax

[Dave Dub]

Hey there,

Short and sweet - My sole taxable income is coming from my rental property which I bought March this year. My interest only mortgage covers takes 70% of the rent (first year only reduced rate) and the rest is excess, how much tax do I pay on this and how and when do I do it. I looked up the Revenue.ie site but still havent been able to get everything answered. I assume that I pay 20% on it less deductions but is it December I pay? do they write to me?

Any advice would be great as I am very new at this.

With thanks

 

[RainyDay]

Have you read the FAQs?

 

[Dave Dub]

I have but my issue you see is that most people have further taxable income putting the rent directly into the 42% tax bracket if they earn awage around 30K. I do not but is rent taxed at 42% automatically??

Then to further complicate the issue my tenants have left half-way through their tenancy so I have to consider doing up the place and how to claim all that back too but when?

Dave

 

[RainyDay]

is rent taxed at 42% automatically??

Nope - the profit (rent less allowable expenses) is income, and that income is taxed same as any other income. If your profit doesn't push you into the 42% income band, then your rent will be taxed at the lower rate.

I have to consider doing up the place and how to claim all that back too but when?

You can't 'claim it back'. As mentioned in the FAQs,

In calculating your taxable profit, you will be allowed deduct any expense incurred wholly, exclusively and necessarily in the letting of the property:

* interest paid
* depreciation of furniture and equipment (12.5% p.a. over 8 years).
* insurance
* maintenance

 

[Dave Dub]

Thanks very much!!

 

[lff12]

Its considered income, so if you have no income whatsoever you'd need to check with the Revenue to see what your tax credits are and deduct off rent due. If the total rent is less than 31k then your tax is 20% of that minus your tax credit.

 

[Dave Dub]

Thanks for your help!