Tax treatment of Rental Property for couple

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suicra05

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Myself and my wife own rental property. The property mortgages etc. are in both of our names. I normally return the income and expenses of the property on my form 11. Should my wife include any of the rental property details (property income etc) on her tax return? Is it beneficial for her to do so?
 
If your wife has no (or very little) other income in her own name, then it is hugely advantageous to put rental income in her name. You maximaze use of her tax credit and band. Plus she gets PRSI contributions credited to her record which will ultimately get her a contributory OAP.
 
Can someone explain this to me?

If married a wife is unemployed does the partner not take the wife's credits against their income (assume high earner?)?

Perhaps the answer is here "
The standard rate cut-off point for married couples/civil partners is €51,000 in 2024. This amount is taxed at 20% and the balance is taxed at 40%. Where both spouses/civil partners have income, this standard rate cut-off point can be increased by the lower of the following:

  • €33,000 in 2024 or
  • The amount of the income of the spouse/civil partner with the smaller income."
Although it doesn't make sense why in one case a couple get 51,000 at 20% and in another they get 66,000, there must be a reason for that?

How does rental income from a BTL in an unemployed partners name work when it comes to tax treatments and the householder policy for pension?
 
A lad named Charlie McCreery decided we needs more women in the workforce, so stopped allowing all tax allowances be transferred between spouses.
 
I am still unclear on how tax on rental income in a non-working married partners name works. Can someone explain it?
 
presidenttttt said:
If married a wife is unemployed does the partner not take the wife's credits against their income (assume high earner?)?
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Personal tax credits are transferable between married partners.
PAYE / earned tax credits are not transferable.

So if the wife has no earned income the couples combined tax credits are 6k.

2 + 2k personal credits and husband's 2k PAYE / earned credits.
 
So and rental income in partner name will be at lower rate? Plus with mortgage interest as deductable it is likely that tax exposure would be low in practise..?
 
presidenttttt said:
I am still unclear on how tax on rental income in a non-working married partners name works. Can someone explain it?
Click to expand...
Rental income is unearned income, so the non working partner gets no PAYE / earned income credits.

If the unworking partner's only income is unearned and is over 5k, they will pay Prsi class S. This will give them 52 contributions per year which are Reckonable for the Contributory pension.

If the unemployed partner cannot gain a substantial portion of the COAP, the joint rental arrangement could backfire.

If one partner has no income at retirement age the couple could get an increase for a qualified adult.

If the unemployed partner has rental income they would likely fail the means test.
 
We are both under 40 so id expect we should both have done enough to qualify for state pension by time we get there. So if i understand your input, the means test is mute unless one is not getting to full state pension?

USC and income tax would follow the usual bands, they can't use tax credits for non PAYE income, so those would stay with the paye worker, and there would be class S PRSI of ~4
 
Yes, if you are both going to qualify for full pension there is no means test.

Yes 4.1% class S Prsi.
Just one thing to be aware of is that if your wife has any earned income during any particular year, her Prsi would convert to class K for that whole year.
This is also 4.1%, but is not Reckonable for the COAP.
If she was employed and received even one class A Prsi contribution she would lose all her class S contributions for that year.

If in the future she decides to take up some class A employment, she can sign on for Jobseekers credits between the employment periods. She is allowed to get Jobseekers credits alongside class S or class K Prsi. This will ensure that she gets 52 reckonable contributions every year.

Small amounts of class A employment can be very tax efficient because she can then make use of her PAYE tax credits.
Using these she can earn up to 10k tax free.
 
presidenttttt said:
I am still unclear on how tax on rental income in a non-working married partners name works. Can someone explain it?
Click to expand...
I find the easiest way to understand this is that a maximum of 9k of the 20% tax band can be transferred between partners.
So for 2025 you both have 44k 20% band.
You can take 9k from your wife.
So now you have 53k and she has a possible 35k.
So she could have rental income up to 35k @ 20%.
 
Apologies foe a bit of a thread hijack but I am really struggling with advantages of optimising rltax treatment of rental income

My wife has recently stopped working

Up to now I've always done the rental returns, form 11

Most of my income is paye

Rental income is about 65k per annum

Rental properties are in our joint name

Can someone please roughly quantity the tax saving if we put all Rental income on my wife's name

And explain the other advantages, my wife would have roughly 30 years prsi contributions

Thanks In advance
 
Looking at post #11

Provided that you are earning at least 53k.

The maximum possible 20% tax band for a married couple is 88k.
So if your wife's share of the rental is a minimum of 35k you will use all your joint maximum of 88k 20% tax band.

Putting more than 35k of the rental income into your wife's name will not gain any extra tax advantage for 2025.

However, because the government have not increased the maximum 9k transferable amount for many years it is likely that more than 35k of the rental income would need to be in your wife's name in future years to maximise your tax advantage.

Apart from this, provided that your wife has at least 5k in rental income she will gain 52 reckonable Prsi contributions for the COAP each year.

If your wife has any PAYE employment in the future she will lose all the Reckonable Prsi contributions for any particular year that this PAYE employment occurs.

In any particular year if she had PAYE employment for 1 week or more she would lose all the Reckonable Prsi contributions from her rental income for that year.

Also if she receives an occupational pension, she will no longer gain Reckonable Prsi contributions from her rental income.
 
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