Expenses for rental income

General expenses

You can claim certain expenses against your rental income to reduce the amount of tax you will have to pay.

Allowable expenses include:

• rates you pay to a local authority for the property
• rents you pay for property such as ground rents
• insurance premiums against fire and public liability
• maintenance of your property such as cleaning, painting and decorating
• property fees before you first rent out your property such as management, advertising, legal or accountancy fees
• the cost of any service or goods you provide that do not get repaid by your tenant such as electricity, central heating, telephone, service charges, water and refuse collection
• certain mortgage protection policy premiums
• expenses in between renting out the property in certain circumstances
• capital allowances
• repairs, such as rot treatment, mending windows, doors or machines

You must keep full and accurate records of all expenses for each property you rent out.

Capital Allowances

You can claim capital allowances, known as 'wear and tear allowances'. A capital allowance is a yearly tax deduction which may be offset against your rental income.

The wear and tear allowance is allowed at a rate of 12.5% of the cost of furniture and fittings for your rental property over eight years. The expenditure must be incurred wholly and exclusively in respect of the property let.

The allowances may include:

• furniture you purchased for your rental property
• the cost of the purchase of white goods such as a fridge or a dishwasher

Capital allowances are allowed for the full year where the basis period is 1 January to 31 December. Where the basis period is different and does not cover the full year, the wear and tear allowance must be restricted.

Non-allowable expenses

It is not allowable to deduct the following expenses when you are calculating your rental profit or loss:

• pre-letting expenses, other than property fees before you first rented out the property
• post-letting expenses
• capital expenses on property improvements unless allowed under an incentive scheme
• expenses on premises rented out on an uneconomic basis, where it is not possible to make a profit from the rent received
• expenses in between renting out the property in certain circumstances
• interest from the time you buy the property up until it is first rented out
• Local Property Tax (LPT)
• any cost for your own labour when carrying out repairs to the property

Pre-letting expenditure on rental expenses

Some expenses incurred on a vacant residential premises prior to it being first let after a period of non-occupancy are allowable as a deduction against rental income from that premises under certain conditions.

• The premises must have been vacant for at least 12 months and then let as a residential premises between 25th December 2017 and 31 December 2021
• A 'vacant premises' is any premises that is not occupied for the entire 12 months before the 'specified day' (the day on or after 25th December 2017 on which a vacant premises is first let as a residential premises).
• The expenditure must have been incurred in the 12 months before the premises is let as a residential premises. This is known as the 'specified period'.
• Where an expense is incurred on a vacant premises during the 12 months prior to first letting after the 12 month vacant period, and this expenditure would be otherwise qualifying if it had been incurred on or after the first day the premises was let, then it may be authorised.
• The deduction is subject to a cap of €5,000 per vacant premises and to claw-back in certain circumstances. If you incur the expenditure and then cease to let the property as a residential premises within 4 years of the first letting, the deduction will be clawed-back in the year in which the property ceases to be let as a residential premises.