Question on rental income, please help

Hi,
Apologies if this has been answered before.

If you buy an investment property in Ireland and rent it out, how much of the mortgage can you offset against the rental income?

We are thinking of buying a house in Galway city centre, value €380k. We would need a mortgage of about €280k so the mortgage would be about €1800 a month. We would get about €900 a month in rental income.
So how much tax would we need to pay on the rental income?

Also, if you buy a foreign property to rent it out, do the same rules apply about offsetting the mortgage against rental income?

Many thanks in advance.

For tax purposes, you should be allowed to set off the interest element of the mortgage against the rental income (provided that you are registered with the PRTB). You would be allowed to other deductions for expenses incurred. See this link.

The tax of the foreign property in the foreign jurisdiction depend on the rules of the foriegn jurisdiction. I know a bit about the overseas stuff. If you PM me the country I see if I can help.

Thanks very much for your reply Newby.

This may be a silly question, but how much of the mortgage is considered the "interest element" of the mortgage - how do you calculate this?

The foreign country we were considering is Poland....

Thanks again

You should get a statement from the bank each year outlining how much of the money you paid related to interest and how much related to principal. The amount that is on that statement that relates to interest should be the relevant amount.

There are other tax considerations in Poland than simply whether or not mortgage payments are deductible against rental income. There are also real estate taxes, transfer taxes, possibly VAT, gift / inheritance taxes.

Thanks Newby

surfergirl said:

how much of the mortgage is considered the "interest element" of the mortgage - how do you calculate this?

Click to expand...

Try this mortgage calculator. You will see repayments breakdown between interest and capital.