PRSI on Rental Income for contributory pension

J

Jordan Belfort

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If retire early I might not have have enough total or average PRSI contributions to get full rate contributory pension. However I think I would still be paying class S PRSI on income (€10000) from a rental property. Will I get 52 class S contributions for this retail income ? Will this be allowed keep my contribution average up in the years between stopping work turning 67 ?
 
You get 52 contributions once you make at least the flat PRSI charge of €500 every year.

Make sure to have rental profits of at least €5k each year otherwise you're not obliged to pay PRSI at all. Just bear this in mind if you are considering renovations, capital expenditure, etc.
 
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Yes the 52 S class will count towards pension.

Bear in mind though if you any other A class employment during the year, even 1 week, your S class contributions will all change to class K and these do not count towards pension.
 
Is there a possible trade-off where someone who leaves the country and has a rental property contributes paying Class S on the rental income (is there a voluntary minimum flat charge for rental income, btw?) and can later on either;

(i) approaching retirement in another EU State, opt to use totality of Irish contributions (Irish employment years & subsequent Irish rental years) to get just the Irish State OAP and the truncated foreign pension .... or ....

(ii) merely use Irish employment years and foreign employment years = full working life pension in that other country?

If there is no choice i.e. no (i) then no voluntary contributions should be made?

(Am assuming in the above, EU cross-border carry-across-entitlement pension rules)
 
LosLobos said:
Is there a possible trade-off where someone who leaves the country and has a rental property contributes paying Class S on the rental income (is there a voluntary minimum flat charge for rental income, btw?) and can later on either;
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No. A non resident landlord doesn't pay PRSI on their unearned income. You can make voluntary contributions if they are allowed.

Some of the specifics are mentioned in this thread: https://www.askaboutmoney.com/threads/non-resident-landlord-prsi-charge-on-income-tax-bill.193247/

It might be easier if you set out a specific scenario to tease it out.
 

So looks like I will be finishing work this year.
2023 I will have some Class A and probably credited stamps for rest of the year if on jobseekers benefit. I will also have rental income but assume they will become Class K because of the Class A payments. Is this correct ?
In 2024 and subsequent year I will have rental income > €5000 so should be getting 52 class S. Would this be automatic on form11 that it would take minimum of €500 PRSI of 4% of rent was not greater than €500 ? Do I have to do anything specific to pay PRSI ?

If I did some paid occasional class A employment would I be able make a voluntary contribution to get 52 credits ? Is that payment flat €500 or based on previous years income? Would the credits be class A or class S ?

If any additional income was all self-employed, class S, would that just add to my rental income and avoid converting rental PRSI to class K?

Thanks in advance, I thought PAYE was complicated by PRSI takes it to another level :-(
 
Jordan Belfort said:
2023 I will have some Class A and probably credited stamps for rest of the year if on jobseekers benefit. I will also have rental income but assume they will become Class K because of the Class A payments. Is this correct ?
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As I understand it, yes.


No, just calculate what you owe (income tax, USC, and PRSI), pay it, and check your contribution history with DSP after a few months to make sure that the 52/53 class S contributions have been credited.

This stuff is beyond my level of expertise. It's not clear to me if one week at Class A in a year makes all your rental income classified as Class K rather than Class S.

Maybe someone else can advise.
 
NoRegretsCoyote said:
This stuff is beyond my level of expertise. It's not clear to me if one week at Class A in a year makes all your rental income classified as Class K rather than Class S.

Maybe someone else can advise.
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Me too, but this source seems to indicate that. https://www.gov.ie/en/publication/294bc0-operational-guidelines-prsi-for-the-self-employed/



 
The ROS form 11 will only apply the minimum 500 euro Prsi contribution if you have self employment income of at least 5000 euro.
If your rental income is below 5000 and you have another self employment income e.g. investment income, then if the extra income added to your rental income totals over 5000 euro you will automatically pay 500 euro Prsi on ROS form 11 and achieve 52 S class confirmations.
For any year that you have any paid A class contributions or M class contributions from an occupational pension all your rental and investment income will convert to K class Prsi.
If you have an ARF this will also allow you to get S class Prsi and also prevent the conversion of S class contributions to K class in any years that you also have any paid A or M class contributions.
You need at least 520 paid prsi contributions before you are allowed make voluntary contributions. These can be a mix of S or paid A. Also if you have paid B of D contributions these can count provided you also have at least 260 paid A contributions.
 
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TheBeach said:
Yes the 52 S class will count towards pension.

Bear in mind though if you any other A class employment during the year, even 1 week, your S class contributions will all change to class K and these do not count towards pension.
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Any idea why this is so? It seems unfair that S (with benefits) changes to K (with no benefit) with same income??
 
@Ravima

As I understand it government wants people if possible to be paying either Class A as employees or Class S as "self employed", but not both. Employees assessed for PRSI on a weekly basis and "self-employed" on an annual basis.

It's worth bearing in mind for someone say aged 62 living off rental income. Even a week of paid employment could see your rental income PRSI paid at Class K instead of Class S and you are missing out on a year's pension entitlement. So short stints of paid employment are probably not wise in the circumstances.

At risk of straying too far off topic, Ireland's personal income tax system is pretty transparent and simple. Ireland's welfare system is by contrast opaque and very complicated.
 
TheBeach said:
Yes the 52 S class will count towards pension.

Bear in mind though if you any other A class employment during the year, even 1 week, your S class contributions will all change to class K and these do not count towards pension.
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Where is this from. I have years of class S contributions and sporadic Class A employment.
 
bstop said:
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I know somebody who has many years of class S contributions. Does this mean if they do work and contribute class A that the years of Class S are removed and substituted with class A or is it only the one year which awarded class A?
 
Pmc365 said:
I know somebody who has many years of class S contributions. Does this mean if they do work and contribute class A that the years of Class S are removed and substituted with class A or is it only the one year which awarded class A?
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It will only ever affect the years that include "paid" A contributions. Any years with no "paid" A contributions are okay.

It also depends on whether the S class are on earned or unearned income.
If the S class is on unearned income and there is also "paid" A class ( even only one) in any year then the S class for that year is changed to K class.
If the S class is on earned income then the S class is not affected when there is also "paid" A class in the same year.
 
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One clarifying question on last line.....If income was mix of Earned Class S ( <5k ), Unearned Class S ( >5k) and some Class A would I get 52 Class S or do some or all convert to Class ? Maybe this is a question for Department
 
The wording on Social protection is if a person has A class and their only other source of income is unearned income then the unearned income is at class K. If they have other earned income e.g. self employment earned income then their unearned income will stay at class S. This is provided that the total of unearned and self employment income is at least 5000 euro. If the person has unearned income and an ARF with a combined total of at least 5000 euro they will also gain 52S class contributions per year.
 
Thanks.....This is another route to 52 contributions as I will have a few €k self employed earned income and some at least €10k unearned income Again, much appreciated
 
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