How much tax will you pay on your rental income?

A worked example

Say you earn €50,000 in a salary and also let a property. The rent brings in €18,000 a year. You spend €3,000 on allowable expenses, pay €5,000 in mortgage interest, and claim €500 in capital allowances. The tenancy is registered with the RTB.

Your taxable rental profit is €9,500. Your salary already fills the standard-rate band, so the whole €9,500 is taxed at 40%, which is €3,800. The rental income relief takes €1,000 off that. USC at 3% adds €285 and PRSI at 4.2% adds €399. Your total tax on the rent is €3,484, an effective rate of about 37%, and you keep €6,016.

How rental income is taxed

Rental income in Ireland is taxed as Case V income. In plain terms: your rental profit, the rent minus what Revenue lets you deduct, is added to the rest of your income and taxed at your usual rates.

Three charges land on that profit: income tax at 20% up to the standard-rate band and 40% above it, the Universal Social Charge (USC), and PRSI. Because the rate follows your total income, a landlord whose salary is already over the band pays 40% on the rental slice, while someone with little other income may pay 20% on most of it.

If your net rental income is under €5,000, you can declare it through Revenue's myAccount on a Form 12. Over €5,000 and you register for self-assessment and file a Form 11 through ROS.

What you can deduct

You're taxed on your profit, not your rent, so what you can claim back matters. Revenue lets you deduct the costs of running the letting, as long as they're wholly for the rental:

• Insurance on the property
• Repairs and maintenance: painting, decorating, mending windows or doors, treating damp
• Management and letting agent fees, and accountancy fees
• The €40 RTB registration fee, each year
• Advertising for tenants
• Local authority rates and ground rents
• Utilities you pay that the tenant doesn't reimburse
• Wear and tear on furniture and fittings, claimed as capital allowances at 12.5% a year over eight years

Repairs or improvements?

A repair puts something back as it was, like fixing a broken window, and you deduct it the same year. An improvement, like building an extension, is capital spending. You can't set it against your rent, though it may qualify for capital allowances, or reduce your capital gains tax when you eventually sell.

What you can't deduct

• Local Property Tax (LPT)
• Capital improvements (claim these as capital allowances or against CGT instead)
• Your own time and labour
• The personal share of any cost that isn't wholly for the letting

Mortgage interest

You can deduct all the interest on a loan used to buy, improve or repair the rental property, as long as the tenancy is registered with the RTB. It's the interest that counts, not the capital you repay. If you've seen older guides mention 75% or 85%, that restriction ended in 2019. It's 100% now.

Reliefs in 2026

The Residential Premises Rental Income Relief is the one to know. It's a tax credit worth the lower of €1,000 or 20% of your rental profit, so it cancels the standard-rate tax on up to €5,000 of it. To claim it, the tenancy must be registered with the RTB and your return filed on time, and it reduces income tax only, not USC or PRSI. The relief runs from 2024 to 2027, and it's clawed back if you stop letting the property within four years.

If a property sat empty for at least six months before you let it, you can also claim up to €10,000 of the cost of getting it ready.

Rent-a-Room relief is a different thing. It's for renting a room in your own home, not for letting an investment property, so it doesn't apply here.

Filing and deadlines

The deadline is 31 October. By then you file last year's return, pay any balance still owed on it, and pay preliminary tax for this year. If you both file and pay through ROS, you usually get a few extra weeks, to around mid-November.

Preliminary tax needs to be at least 90% of this year's bill or 100% of last year's, whichever suits you. Most landlords simply match last year.

Leave rental income undeclared and Revenue can come back for the tax with interest of roughly 8% a year, plus a surcharge of 5% or 10% for filing late. And the tax is due on rent you were owed, even if a tenant never paid it.

Common questions