Letting fees an allowable expense against rental income before assessing income tax liability
Published 10/11/2015 | 00:00
Q Can you confirm whether agent monthly letting fees are an allowable item for tax purposes? Do you have a definitive list of allowable landlord expenses, or can you point me in the right direction?
A Letting fees are an allowable expense against rental income before assessing income tax liability. Getting a specific definitive list of expenses that can be set against rental income is not as easy as it sounds.
The Revenue gives a guide to the type of expenses that are allowable, rather than a specific line by line list. It can be found in Leaflet IT70 called A Revenue Guide to Rental Income.
q You can claim up to 75 per cent of interest paid on a mortgage taken out to purchase investment property against rental income.
q Any insurance premiums you have to pay to protect the property
q Management fees, which certainly includes your agent's monthly letting fees.
q Estate agent fees incurred in purchasing the property in the first place (and selling it).
q Advertising costs incurred trying to find tenants for your property.
q Legal fees that arise in drawing up leases or otherwise directly incurred in letting the property.
The fee for registration with the Private Residential Tenancies Board, which is now obligatory for all landlords, can be set against your rental income. Avoiding PRTB is not an option. Apart from being illegal, it also means you will not be allowed claim relief on mortgage interest.
Once you let out the property, there will be maintenance costs to meet and it is likely that small (and not so small) problems requiring repairs will arise. You can claim for the cost of hiring others to carry out these jobs, but an important exclusion is that you cannot claim for your own time, for instance in cutting the grass and such like.
When it comes time to prepare your accounts for Revenue, you can claim the fee charged by your accountant against rent.
You can claim for service charges, such as bin collection, assuming you are paying them in the first place.
You can also claim for wear and tear. This effectively covers the cost of materials acquired to furnish your rental property. While some landlords will recount tales of furnishings that last only a few years, Revenue will allow such "capital allowances" at a rate of 12.5 per cent per year over eight years. Capital allowances do not cover costs incurred in extending, altering or refurbishing your property. For these you will have to rely on other dedicated schemes like the current home renovation incentive scheme.
If you require any further information please contact George Skelton 053 9170507 or email firstname.lastname@example.org