As many Irish landlords will already know, if you’ve taken out a loan to buy or renovate a rental property, the interest on the loan can be deducted from the rental income. What many do not know however, is that if it’s a residential property, the deduction does not apply unless the requirements of the Private Residential Tenancies Board (PRTB) are met.
Each Irish tenancy agreement must be registered with PRTB, including updates for each new tenant at the property. Additionally, interest can only be deducted if the entire amount of the loan was used in buying or renovating the rental property. So, if you used an loan for an Irish property to buy a holiday home in Spain, the interest on that loan cannot be used against the rental income from the Irish property. Or, if you used only part of the loan to pay for a holiday, then that portion of interest will also not be allowed. Since April 2009, 75% of any qualifying interest is claimable as a deduction against rental income.
If you’re renting a property in Ireland, it is essential to ensure that you’re fully compliant with PRTB guidelines. Not doing so could cost you highly from a tax perspective!