Question:
If I own a house in Ireland but work abroad in a tax-free country, is the rental income taxed in Ireland? If I own a house in Ireland but work abroad in a tax-free country, is the rental income taxed in Ireland? It is to an immediate family member (mother)?
Answer: Barry Flanagan, director, taxback.com
Regardless of the jurisdiction you are from, working in or temporarily residing in, the basic rule for income arising from immovable property located in Ireland (i.e. rental income) is that it is taxable here.
Effectively there is no way around this - if a property you own (or even sublet) is situated in Ireland, Revenue will seek to tax the profits from any rental income arising from it.
This applies to both Irish citizens and foreign nationals who may never have set foot in the country. Regardless of nationality of the owner, individuals would in almost every case be liable to Irish tax on income derived from Irish sources.
It is important to note that it is only the profit that is taxable. Therefore, the usual deductions/expenses can be taken from rental income that is received, such as management fees, maintenance and repairs, capital allowances and insurance costs etc. Be sure that you are not overpaying tax by failing to take into account an allowable expense.
A further point that will arise is that if you are located abroad for an extended period of time, you may well have become non-resident in Ireland for tax purposes. While this will not affect the taxability of the rental profit, different rules around the collection of rent apply to “non-resident landlords”.
Revenue have published excellent guidance on how the position is different for Irish resident and non-resident landlords which you should consult. Essentially, you will be obliged to either appoint a collection agent or alternatively your tenant should deduct 20 per cent of the gross rent at source and pay that directly to Revenue, where it will stand as a credit against the ultimate liability.
Finally, if the jurisdiction also seeks to tax this income, relief may be available in the form of a Foreign Tax Credit, should there be a Double Taxation Agreement in place.
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