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Panel C

Irish Rental Income, Page 9, Lines 201 to 216

I let out a rental property during 2018; how do I calculate my net rental income?

You must calculate how much tax you owe on the gross rents receivable, after deductions for expenses and allowances. A profit or a loss is calculated for each rental source (residential or commercial). The rental income on which you pay tax is the total profits less the total losses.

Allowable expenses include:

• Local authority rates;

• Ground rents;

• Insurance premiums;

• Maintenance and repairs;

• Property fees before you first rent out your property, such as management, advertising, legal or accountancy fees;

• 85pc of the mortgage interest paid on the property;

• Expenses in between renting out the property in certain circumstances;

• Capital allowances.

TOP TIP: In order to receive the mortgage interest relief deduction, you must have registered with the Residential Tenancies Board for each tenancy during 2018.

If there is no change in tenancy, the registration needs to be re-registered every four years.

Your mortgage provider should issue you with a mortgage interest certificate at the end of each tax year, which confirms the total amount of interest charged in the year.

You can deduct the full cost of repairs and maintenance in 2018, however you must claim back the cost of expenses of a capital nature, e.g. kitchen appliances, as capital allowances over eight years.

TOP TIP: Remember that you can offset losses brought forward from prior years against your 2018 net rental income in most circumstances.

What if I have some income from Airbnb lettings? Do I have to declare this income?

Yes, income arising from Airbnb (or similar service provider) lettings is taxable. There can be some confusion over how to treat this income, and therefore where to report it on the Form 11.

The Revenue Commissioners confirmed last year that the income from providing accommodation to occasional visitors for short periods is not considered to be rental income, as the visitors use the accommodation as guests, rather than as tenants. Their view is that this income should be reported as trading income (Panel B), where the taxpayer is trading as an ongoing business (e.g. a guesthouse), or other income (Panel F, line 412), where the income is occasional in nature.

This would mean that rental losses on other properties could not shelter income from this source. When treated as other income, there is a Revenue practice of allowing a deduction for incidental costs directly associated with the provision of that service.

Examples of such costs would include cleaning fees, the cost of breakfast provided to guests, and a reasonable apportionment of utilities bills attributed to the guests. You should seek advice from a professional tax adviser if you are unsure of how to report this type of income.

This is a topical area of interest to the Revenue Commissioners, and last year, they commenced an exercise of writing to homeowners who have used the Airbnb service for lettings for some prior years, and who have not reported their income previously.

Therefore, it is really important any income from this source is properly disclosed.

Sunday Indo Business