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Rental Income Tax Formula:
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Rental income tax in Ireland is calculated on the profit from renting out property after deducting allowable expenses. The tax rate depends on your total income, typically 20% for standard rate taxpayers and 40% for higher rate taxpayers.
The calculator uses the rental tax formula:
Where:
Explanation: The calculator first deducts allowances and expenses from gross rental income to determine taxable amount, then applies the tax rate.
Details: Accurate rental tax calculation helps landlords comply with Irish tax laws, plan finances, and avoid penalties for underpayment.
Tips: Enter gross rental income, any applicable allowances, deductible expenses, and your tax rate. Common expenses include mortgage interest (restricted), repairs, insurance, and property management fees.
Q1: What's the difference between standard and higher tax rates?
A: In Ireland 2023, standard rate is 20% on income up to €40,000 (single) and higher rate is 40% on income above this threshold.
Q2: What expenses can I deduct?
A: Allowable expenses include mortgage interest (75% in 2023), repairs, insurance, property tax, management fees, and certain capital allowances.
Q3: Are there any tax-free allowances?
A: The Rent-a-Room scheme allows €14,000 tax-free if renting a room in your main residence. Normal rental properties don't have general allowances.
Q4: How is mortgage interest treated?
A: Mortgage interest is deductible at 75% in 2023, increasing to 100% by 2024. Only interest on loans used to purchase/improve the property is deductible.
Q5: When is rental income tax due?
A: Rental income is taxed in the year it's earned. Preliminary tax is due by October 31st each year, with balancing payment by October 31st following the tax year.