Deductions and capital allowances on Irish rental income

Every autumn we see the same Irish file: a decent year of bookings, a shoebox of receipts, and an owner who has deducted far too little or a few things Revenue will not accept. Revenue publishes what is allowable, and the list is more generous than most owners use.

The sentence that governs everything else

Revenue's guidance on allowable expenses contains a line that decides most arguments before they start: the receipt of rent is treated as the carrying on of a trade, and expenses are only allowed to the extent that they would be allowed for that trade. A cost that is private, capital, or unconnected to earning the income will not survive here either.

The second governing sentence: you must keep full and accurate records of all expenses for each property you rent out. Per property, not per owner.

What Revenue lists as allowable

• Maintenance: cleaning, painting and decorating.
• Repairs, with Revenue's own examples — rot treatment, mending windows, doors or machines.
• The cost of any service or goods you provide that are not repaid by the occupant: electricity, central heating, telephone, service charges, water, refuse collection.
• Certain mortgage protection policy premiums.
• Expenses between lettings, provided you did not occupy the property yourself before the new letting was signed.
• Capital allowances, certain pre-letting expenses on vacant residential property, the retrofitting deduction, and the cost of registering with the Residential Tenancies Board.

Two deserve a second look from short-term owners. Owners forget the pre-first-letting fees line entirely, because the spending happened before there was any income to set it against. The between-lettings line holds only if you did not move in yourself during the gap.

Furniture and fittings: 12.5% for eight years since 2002

Capital allowances on furniture and fittings — wear and tear — run at 12.5% of cost per year for a maximum of eight years, set by the Finance Act 2003 for expenditure incurred on or after 4 December 2002. Revenue's examples are deliberately mundane: a €1,000 suite of furniture gives €125 a year for eight years; two furnished houses whose contents cost €2,400 and €8,000 give €1,300 a year, claimed against total rental income.

Pre-letting expenses on a vacant property: €10,000, and a four-year string attached

Two thresholds moved on 1 January 2023, and quoting either one without its date is how owners get this wrong:

• The cap doubled. Section 97A(4) caps the deduction at €10,000 per vacant premises from 1 January 2023. Before that date it was €5,000.
• The vacancy period halved. The property must have been vacant for at least six months before the first letting. Prior to 1 January 2023 the minimum was twelve months.
• The spending window is twelve months — the expenditure must have been incurred in the twelve-month period before the property is let.
• There is an end date. The Finance Act 2024 extended the relief to expenditure incurred before 31 December 2027.

Partial letting: apportion, do not round

If you let part of a premises, only the portion of the expenses relating to the let part is deductible. Revenue's illustration: if half the rooms are let, half of the expenses can be claimed. Decide your apportionment basis, write it down, and use the same one every year.

Interest: read the condition, not the headline

A genuine holiday letting is not an RTB tenancy, so that condition does not sit comfortably over a self-catering property, and we will not tell you how your case resolves. Take it to your accountant as a written question: on my facts, in this year, is my loan interest deductible, and under which heading is this income assessed? The answer belongs on file before the return is filed.

Our advice, plainly

Then look at what you are not claiming. In our experience the money owners leave on the table is pre-letting professional fees, wear and tear on furniture bought years ago, and service costs absorbed personally and never invoiced.

If you own a holiday property in Kerry, Clare, Donegal, Dublin or anywhere else in Ireland and want the operating side documented well enough to survive a query, send us the details. We study every request and tell you honestly whether and how we can help.