Non-resident landlords

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 has an Irish resident person they can pursue for unpaid taxes there is no requirement to have rent withheld.

 

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.

For a house worth €425,000 the LPT in a full year is €765.  In 2013 the LPT is charged a reduced rate of 50% with the full rate commencing in 2014.

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.

 

  • Non-Principal Private Residence levy (“NPPR”)

The NPPR is a charge introduced in 2009 and it applies to all non-principal private residences in the State. In other words, any residential property which is not the main home of the owner attracts the levy.  A property whose owner lives abroad will be a non-principal private residence.

The charge is €200 per annum but the surcharge for late payment runs at €20 per month.  For example, a person who has been due to pay the levy on a single property since it came into force in 2009 would, at the end of 2013, owe €3,920 (€1,000 in NPPR and €2,920 in surcharges).

The NPPR is being phased out at the end of 2013.  More information can be obtained from www.nppr.ie.

 

  • Household charge

The household charge was a local authority levy applied to all residential properties in Ireland which only existed for 2012; it was replaced by the LPT from 2013 onwards.  The levy was €100 per dwelling.

If the household charged has not been paid by a property owner Revenue have taken over the collection from the local authorities and the amount has been increased to €200 including surcharge.

See www.householdcharge.ie and the relevant Revenue webpage for further details.

 

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 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

        Phone 01 9022 570
        Email tax@bainbridge.ie
        Web www.bainbridge.ie
        Post Bainbridge Tax Consulting, PO Box 12231, Dublin 14