It is commonly thought that once people are not living in Ireland they will have no tax obligations in the State.  However, irrespective of a person’s residence for tax purposes all rental income from Irish property is taxable in Ireland.  Many people who have moved abroad in recent years have rented out their homes in Ireland without considering whether they are exposing themselves to taxes and significant levels of interest and penalties.

If you have moved abroad, even temporarily, and are renting out your house or apartment in Ireland you should urgently address your obligations to ensure that matters do not become even more significant.

For more information relating to the taxation of Irish rental income please click here .

Collection agent or withholding tax

A tenant is obliged to withhold 20% of the rental amount and pay this over to Revenue when they are renting a property from a non-resident. The reason for this is that Revenue wants to ensure they obtain tax from a person who is abroad and difficult to pursue for overdue amounts.

The tenant must complete a form each year and the landlord uses this form to claim the 20% withheld against their annual income tax bill.  This is an overly complex procedure which risks the landlord not being able to get the necessary credit.

An alternative procedure is where the landlord appoints an Irish resident collection agent. This person, often a family member or friend, is deemed responsible for the landlord’s tax bill should he not pay it.  As Revenue can pursue an Irish resident person for unpaid taxes there is no requirement to have rent withheld by your tenant.

We can act as your collection agent.

Other taxes and charges

• Local property tax (“LPT”)

The Local Property Tax came into force in 2013.  The basic tax is calculated at 0.18% of the value of a residential property to a maximum value of €1,000,000 ant 0.25% on any value over €1,000,000.  It does not matter whether the owner of the property is resident in Ireland or otherwise when determining liability.

Local authorities have the option to vary the amount of tax by +/- 15%.

The interest rate on unpaid amounts is 8% per annum and penalties may also arise.  The LPT is administered by Revenue.  Further information can be found on the Revenue website.

How can Bainbridge Tax Consulting help?

We assist non-resident landlord clients to navigate the process to register for tax, register a local collection agent and calculate accurately their income and expenditure from rental property.

We can act as collection agents on behalf of non-resident landlords.

We can act as agent for Local Property Tax for non-resident landlords.

We work with our clients to try to identify every available expense to be claimed in order to keep tax liabilities to a minimum.

We help our clients ensure that their compliance obligations are met in order to avoid punitive interest, penalties and potential publication in the event of a Revenue audit.

Please contact us if you have any queries regarding tax in relation to rental properties