Rental income is a common source of income for many people in Ireland. Whether you rent out a single room or an entire property, it’s important to know how this income is taxed. Understanding your tax obligations helps you stay compliant and avoid penalties. This guide will explain how rental income is taxed in Ireland, what expenses you can claim, and how to file your tax return. It’s especially useful for landlords and property owners who want to manage their finances better and stay on the right side of the law. Let’s explore the key rules and steps involved.
What is Considered Rental Income in Ireland?
In Ireland, rental income is essentially all of the money a landlord takes in from renting properties. This can come from homes, flats, commercial premises, or vacation homes. It also comprises payments from tenants for supplemental services, such as cleaning or parking. If you own your own home and rent out a room it may also amount to rental income (unless it qualifies for the Rent-a-Room Relief). Short term lets (like Airbnb) also count as rental income. All of this needs to be declared to Revenue, who may also be due some tax based on your total income and expenses, but not 5 per cent of all the money you received!
Tax Rates on Rental Income
In Ireland, rental income is considered part of your overall income and taxed accordingly. The tax rate depends on how much total income you earn in a year. You can learn more about general income taxation in our income tax services in Ireland section.
Income Tax Rates
- For 2025, the initial €44,000 of your total income (if single) is taxed at the basic rate of 20%.
- Beyond that income is taxed at 40%.
- For married couples who share income and file jointly, the limits are higher.
- Rental profit is combined with other sources of income in order to establish the applicable tax band.
Additional Taxes: PRSI and USC
- On top of income tax, rental income is also subject to Pay Related Social Insurance (PRSI) at a rate of 4% for Irish tax residents.
- The Universal Social Charge (USC) also applies, with rates ranging from 0.5% up to 8%, depending on total income.
- Non-resident landlords still pay USC if their Irish rental income exceeds €13,000 but are exempt from PRSI.
How to Calculate Rental Income Tax?
How to calculate rental income tax in Ireland Calculating tax on rental income in Ireland is relatively straightforward. The trick is to figure out what your net rental income is and then apply the appropriate tax rates.
Step 1: Calculate Gross Rental Income
This is the overall rent you collect from your tenant(s) over the year. Account for every dime you spent for rent and any additional rental-related costs.
Step 2: Deduct Allowable Expenses
You can deduct some expenses related to running and upkeep of the property. Common allowable expenses include:
- Interest on mortgage (only if with RTB-registered property)
- Repairs and maintenance costs
- Property insurance
- Management fees
- Property tax (Local Property Tax)
These deductions reduce your taxable rental income.
Step 3: Determine Net Rental Income
Deduct from the gross rental income all expenses that are allowable. The result is your net rental income – this is the amount on which you will be taxed.
Step 4: Apply Income Tax Rates
Add your net rental income to your other sources of income (like salary or business income). Your total income will determine your tax rate:
- Income up to €44,000 is taxed at 20%
- Income above €44,000 is taxed at 40%
Step 5: Include PRSI and USC
In addition to income tax, PRSI, at 4%, and USC, applied at between 0.5% and 8%, may be chargeable on your rental income.
Step 6: Claim Any Tax Credits or Reliefs
You are able to claim some reliefs to lower your taxable income, such as the Rental Income Relief (RPRIR), which offers tax credit for some rental income.
Step 7: Calculate the Final Tax
Calculate your tax based on rates and apply any credits or reliefs to find the total tax payable on your rental income.
Tax Reliefs and Allowances for Landlords
In Ireland, landlords can reduce their rental income tax by claiming various tax reliefs and allowances. These help lower the taxable income and the overall tax bill. To make sure you claim every relief available, consult with accountants in Dublin who specialise in landlord and property taxation.
Residential Premises Rental Income Relief (RPRIR)
This relief will incentivize landlords to maintain their unit(s) on the market for at least four years (2024-2027). From 2025, landlords can obtain a tax credit of €800, or 20% of their rental income up to a maximum of €4,000. This exemption is limited to income tax and will be recapture if the property is sold within the four years. In order to qualify, landlords must register the property with the RTB and remain compliant, for instance by adhering to tax and local property tax regulations.
Mortgage Interest Relief
Landlords may deduct mortgage interest if you borrowed to buy, build or improve a rental property, as well as interest on credit cards for services or goods used in a rental activity. The property itself must also be enrolled with the RTB, and the mortgage interest deduction reduces the taxable rental income. There is no cap or limit on this relief for 2025.
Other Allowable Expenses
Landlords can also deduct expenses such as:
- Repairs and maintenance costs
- Property insurance
- Local Property Tax (LPT)
- Property management fees
- Legal and accounting fees related to the rental property
- Capital allowances on furniture and fittings, usually claimed at 12.5% per year over eight years
Rent-a-Room Relief
If a landlord rents out a room in their primary residence, they may earn up to €14,000 tax-free under this relief.
Filing and Payment of Rental Income Tax
If you earn rental income in Ireland, you need to file a tax return and pay tax on the income each year. Timely filing can prevent unnecessary penalties. Our payroll services in Dublin and VAT service in Dublin teams handle compliance and submissions for both individuals and small landlords.
How to File Your Rental Income Tax
- If your net rental income is less than €5,000 you can declare it using the myAccount service by including it in your annual Income Tax Return.
- In this case where your net rental income is over €5k you need to register for self-assessment and submit your tax return in intervals of the year commencing 2020 online using the Revenue onLine Service (ROS).
- Rental income bearing companies are required to file a Form CT1 (Company Tax Return).
- Non-resident landlords must also declare the rental income, and may claim credit on any taxes deducted at source.
When to File and Pay
- The deadline to file your rental income tax and pay the tax due is 31 October each year if filing on paper.
- If you file online using ROS, you often have until mid-November.
- It is important to file and pay on time to avoid any penalties.
Penalties for Late Filing or Payment
- If you fail to file your tax return or pay tax on time, the Revenue may charge penalties, starting at 5% of the tax due.
- Additional daily interest is charged on any unpaid tax until it is settled.
- Late filing could also lead to further enforcement or legal action.
Keep Records
Landlords should keep all records relating to rental income and allowable expenses for at least 6 years. These records help you complete your tax return accurately and support any claims for expenses.
Final Words
It’s important for all property owners and landlords to understand how rental income is taxed in Ireland. Understand how to pay your taxes, what deductions you can take, and how to file properly to run your rental business with ease and without penalty. * Make sure to keep accurate records and consult an expert when necessary. Being in the know allows you to optimise your rental earning and remain in full compliance with Irish tax legislation. Whether you are new to being a landlord or an old pro, effective tax planning is essential to achieving long-term success. Follow reliable sources for more advice and stay informed, or consult a tax professional.
Whether you own one property or several, online accountants in Dublin can make sure your rental income tax is managed efficiently, so you stay compliant and stress-free.