Foreign rental income

Foreign rental income is considered to be income earned from rent of property (commercial or residential) abroad.

Your domicile (generally the country that is your permanent home) will likely affect how your foreign-sourced income is taxed in Ireland. A person who is resident and domiciled in Ireland must pay tax in Ireland on their worldwide income.

Someone who is not domiciled in Ireland only pays Irish tax on the foreign rental income that they bring into Ireland. This is known as the 'remittance basis' (for funds you send to Ireland from abroad via wire, mail, or online transfer) of taxation. On the remittance basis, you are taxed on the full amount of rental income that you remit and no deductions are eligible against the amount.

Calculating your taxable foreign rental income

Your taxable foreign rental income is the foreign rent you expect to receive even if this figure is different from the foreign rent you actually receive. To calculate the net amount, you must subtract your allowable expenses and deductions from your taxable foreign rental income.

If you are taxed on the remittance basis you have to pay tax on the total amount, without claiming expenses or deductions.

If you make a loss from renting out your foreign property, you can offset that loss against profits from other foreign rental properties that you own or you can carry forward it until you can offset it against a foreign rental profit. However, it is not possible to offset a loss from foreign rental properties against Irish rental profits.

The Income Tax is calculated on the net foreign rental amount on your Form 11 or Form 12 tax return.

If you earn other income during the year, such as from a Pay As You Earn (PAYE) employment, a pension or other non-PAYE income, if you wish, you can choose to pay the tax due on your foreign rental income by reducing your tax credits by the appropriate amount.

To be eligible for this, from 2015, your gross non-PAYE income must be less than €30,000 and your net non-PAYE income must be less than €5,000. For previous years your gross non-PAYE income must be less than €50,000 and your net non-PAYE income must be less than €3,174.