Holiday Home Tax – How Much Will You Make?

Tax implications when letting

Holiday homeowners often ask us about the tax implications when letting a holiday home in Ireland. Tax is something we all need to understand, so if you are thinking of investing in a holiday home in Ireland you should take the time to know exactly how much you will make.

We reached out to Eamonn Flynn (B.Comm, MMII, FCCA) of TaxAssist Accountants Wicklow who answered some frequently asked tax questions when letting out your property as a holiday home in Ireland.

Tax Services

Do I need to register with Revenue?

In short, yes. Any income you receive from letting out your holiday home is taxable and must be declared. Your details are likely already with Revenue because any agents you use are now legally required to provide information about your earnings annually (by September for the year previous) to Revenue.

How much tax do I pay letting my holiday home?

Tax is paid on the profit you make on letting your holiday rental. You calculate this by subtracting your allowable expenses from your total income.

Three different types of tax must be paid:

  • Income Tax – will be at either 20% or 40%, whichever rate applies to you
  • Universal Social Charge (USC) – payable is between 0.5% and 11%
  • PSRI – may also be due at a rate of 4%

What expenses can I potentially claim?

To arrive at your profit deduct any expenses such as the below;

  • Mortgage interest on loan to acquire property
  • Repairs, for example, damp and rot treatment, repairing broken windows or appliances
  • Maintenance, for example cleaning, painting or decorating
  • Management and estate agent fees
  • Fees paid to accountants for preparation of accounts
  • Advertisement expenses
  • Insurance premiums
  • Most mortgage protection policy premiums
  • Service charges if these are paid by the landlord and no separate payment is received from the tenant(s), for example, bin charges, electricity, gas, phone rental, etc.
  • Rates paid to a local authority

There is also an allowance for wear and tear of furniture and appliances. 12.5% of the cost of furniture and appliances can be offset per annum for 8 years.

For example, if you purchase furniture for €1,000, for the next 8 years you can offset €125 each year against the rental income (1000 * 12.5%).

What if I am making a loss?

If you are making a loss, you should not need to pay tax but you still need to inform the Revenue about your income and expenses so you will still have to file a tax return.

How do I file?

If your profit after deducting allowable expenses is less than €5,000, you can use Revenue’s myAccount system to declare it.

If your profit after deducting allowable expenses is over €5,000 you will have to register for self-assessment, using Revenue Online Service (ROS) to declare your income in your Form 11.

If your gross letting income is more than €30,000 in the year then you will also have to register for self-assessment regardless of what profit you make.

What deadlines do I need to be aware of?

31 October is the annual deadline for filing your income tax return. This deadline is extended, usually to the 2nd week of November, if you file your return and pay your outstanding taxes using Revenues Online Service (ROS). Tax returns for any income earned in 2020 are due to be filed by 31 October 2021. We are still awaiting confirmation of the extended deadline for filing using ROS in 2021.

TaxAssist Accountants help thousands of property owners every year to file their income tax return. By working with a professional to file your returns you can have peace of mind that everything is filed accurately minimising your risk of a Revenue enquiry into your tax affairs. It also ensures you do not pay any more tax than you need to.

Call TaxAssist on 1800 98 76 09 or submit an enquiry online to book your free initial consultation and get the ball rolling on this year’s tax return.

How to let a holiday home in Ireland?

We have a real passion for the self-catering industry and we want to make letting your holiday property as simple and safe as possible at this time. Established in 1986, Trident Holiday Homes is Ireland’s largest serviced holiday rental provider. Whether you are a new owner, experienced in letting or thinking of buying, we can help you target the right audience.

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