Irish Property, Living Abroad – What To Do About Tax

Do you live outside Ireland but own an Irish property? Are you worried about Irish Income Tax or Property Taxes? If so, read on…

If you own an Irish property but live in Northern Ireland or overseas, you will be liable to Irish Income Tax on your rental income, in addition to Property Taxes on the property.

Income Tax

As a non-resident landlord with Irish rental income, you are subject to a series of special Income Tax rules.

1. You will first need to register yourself as property owner for income tax with Revenue, with effect from the date you first start renting the property. Ideally, you should register with Revenue as soon as you first receive rental income although it is possible to register retrospectively.

Irish Property, Living Abroad & Tax – What To Do

2. You should also register with Revenue a person you nominate as your ‘Collection Agent’ for Revenue income tax purposes.

3. Once your rental commences, you will need to register your tenancy/tenancies with the Residential Tenancies Board (RTB).  Otherwise, you will not be entitled to claim mortgage interest as a deduction against taxable rental income. Since May 2009, the amount of mortgage interest you can claim as a deduction against rental income is capped at 75% of the total interest charge.

4. If you are currently receiving mortgage interest Tax Relief at Source (TRS) on the property, you will need to contact Revenue TRS Unit to have this cancelled.

You will be liable also to repay to Revenue any TRS you have been paid since you vacated the property.

To engage with Revenue TRS unit, you will normally just need your PPS number, mortgage account number and your property address. I have always found them to be efficient and helpful.

5. After the end of each year, you (or your accountant) need to complete a Rental Profit & Loss Account  and income tax return, and file these with Revenue.

The Irish Income Tax system works on a calendar year basis, ie each tax year starts on 1 January and ends on 31 December.

It may transpire that you have little or no tax liability for each year (particularly if there is a large mortgage and you have registered with the PRTB) but you won’t know this for certain until each year’s tax return is prepared.

If you are not entitled to any Irish tax credits as a non-resident, your Income Tax liability will normally be a flat 20% of your rental profit for the year. (A higher tax rate of 40% applies to any excess profit over €33,800 in 2016 & 2017).

You may also be liable for Universal Social Charge or USC on your rental profit, but you should be exempt from PRSI on the basis that you are non-resident.

6. Your tax return for any given year is due for filing by the following 31 October, and this is also the payment deadline for any tax liability you have. For example, you must file your 2016 tax return and pay the liability by 31 October 2017.

The deadline for filing a 2015 return was 31 October 2016, with corresponding deadlines for earlier tax years.

Going under!

If you have a number of annual tax returns outstanding, it is important that these are completed and filed at an early date, in order to minimise the risk of Revenue applying interest or penalties or late or non-filing.

In my experience, once an individual makes a decent effort to bring their tax affairs up to date within a reasonable timescale, Revenue are generally helpful and co-operative.

A 5-10% tax surcharge automatically applies to late-filed returns, eg a liability of €500 is increased by 10% to €550.

Revenue routinely apply this surcharge when processing late-filed returns, but if late returns are filed voluntarily (eg without prompting from Revenue & in advance of any Revenue audit notification or warning being issued) they may, in individual cases, opt not to charge additional penalties or interest.

However, if you find yourself in this position, you need to tread very carefully.

If Revenue believe you have underpaid tax, or made incomplete tax returns, they have extensive powers to impose more serious penalties and interest charges, and they reserve the right to initiate prosecution for suspected evasion.

For this reason, I recommend that you seek professional assistance if you are filing late or are uncertain as to what to do.

Property Tax

In  addition, all owners of Irish residential  property are obliged to register and pay an annual Local Property Tax (introduced on 1 July 2013)  Interest and penalties apply to late payments.

Updated 16 January 2017

11 thoughts on “Irish Property, Living Abroad – What To Do About Tax

    • Very good summary of the tax implications for non resident landlords. I wish I had seen it years ago!

      About the USC.. I see that there is a recent ruling by the European Court about social charges levied by the French government on non-resident property owners.. seems like its illegal.. see the link;

      http://www.french-property.com/news/tax_france/social_charges_illegal_european_court/

      I was surprised when the USC appeared a few years ago on my revenue assessments (especially now that they levy a minimum USC charge!).

      Do you know if this ruling could apply to the Irish situation?

      Thanks

  1. If the rental income is more than 32,000 per annum, I will be taxed at 41% bracket as an individual. What if I set up and holding company to purchase a property in Irland, will it be 20%? Thanks,

    • Hi Sabrina

      It is generally not tax-efficient to own an Irish property investment through a holding company. This is because of a 25% Corporation Tax rate on investment income, a further 20% Corporation Tax surcharge where such income is not distributed to shareholders within a limited period, and furthermore a double charge to Capital Gains Tax on the disposal of the property.

      Feel free to come back to me if you have any further queries.
      Best regards

      Tommy

  2. Hi my rental income is only 7,200 per annum, am I still liable to pay tax, the rental income is not even covering the mortgage talk less of the 10% agent’s fee.

    • Hi Shola, impossible to tell without knowing the details, bear in mind that your mortgage payment is not reckonable against tax, but your interest (75% of it) which will be a lower figure unless you’re on an interest- only mortgage.

      You should note also that with that level of gross rental income, you are technically obliged to register with Revenue for self-assessment income tax & file a Form 11 return each year.
      If you need any assistance, feel free to email me at tax@McGibney.com

      Best regards
      Tommy

  3. Thank you.
    Once I declare the rental income and pay the tax, is that it?
    Do I also need to declare my income from my job in the US where I have been living since April 2010?

    • Hi

      Apologies for the delay in replying.

      As long as you are non-resident in Ireland, your employment income in the US should be outside the scope of Irish tax. Hence there is no need to include this on your Irish non-resident income tax return.

      Feel free to reply or email if you would like more detailed advice or assistance.

      Best regards

      Tommy

  4. I am non resident in Ireland but have Irish rental property, If I declare this on my Canadian tax return and pay taxes do I still need to submit and Irish tax return and pay taxes. With the tax treaties if I pay it in one country does this suffice?

  5. I am a landlord of a semi-detached house in Kildare which I am currently renting to a great tenant. However I am in the process of renewing the house insurance and so far three insurance companies have declined insurance because I am not currently living in Ireland

    Does anyone know an insurance company that will insure a rented house where the landlord is an Irish citizen but is not currently living in Ireland?

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