Since January 1st, 2002, buy-to-let investors can offset mortgage interest repayments against rental income.

Rates payable on the property, the cost of goods and services provided for under the lease to the tenant and the cost of maintenance, repairs, insurance and management of the property can also be offset against the rent.

Investors can claim tax relief on premiums paid into a mortgage protection policy where the insurance is required by the lender as a condition of the loan.

The relief only applies to decreasing term insurance policies, not level term insurance - the type often required when borrowers take out interest-only mortgages.

The interest repayments allowable include those charged on borrowings used to pay stamp duty costs and legal fees relating to the purchase of the property.

If the interest paid and other deductible expenses exceed the amount of rent received in one tax year, the excess can be carried forward and offset against the investor's future rental income.

When selling the property, buy-to-let investors will be liable to capital gains tax (CGT) on any profit.

CGT is currently charged at a rate of 20 per cent. The profit is calculated by subtracting the original cost of acquiring the property from the net sale proceeds.

An annual exemption of €1,270 may be deducted, if it has not already been used up.