What is actually taxed
Not the rent. The taxable figure is rental profit — gross rents received, less allowable expenses and capital allowances. That profit is then added to your other income and taxed at your marginal rate, with USC and PRSI applied on top.
For a landlord already paying tax at 40%, the combined rate on rental profit commonly lands around 52% once USC and PRSI are counted. That is the number to plan against, not the 40%.
Rental profit is taxed whether or not you take the money out, and whether or not the mortgage swallows it. The mortgage capital repayment is not an expense — only the interest is.
What you can deduct
- Mortgage interest, where the loan was used to purchase, improve or repair the property, and only for the period it is let.
- The cost of registering the tenancy with the Residential Tenancies Board.
- Insurance on the property.
- Management fees, letting agent fees and advertising for tenants.
- Repairs and maintenance — genuine repairs, not improvements.
- Accountancy fees for preparing the rental accounts.
- Service charges, and any rates or ground rent you pay.
- Utilities you pay rather than the tenant.
What you cannot deduct
- The capital element of your mortgage repayments.
- Improvements and enhancements, as opposed to repairs. These go against your eventual capital gain instead.
- Pre-letting expenses, other than under the specific relief below.
- Local Property Tax.
- Your own time and labour spent on the property.
Wear and tear on furniture and fittings
Capital allowances are available on furniture and fittings in a let property at 12.5% of cost per year for eight years. So a €4,000 furnishing spend gives €500 a year for eight years, not €4,000 in year one.
Keep the invoices. Reconstructing a furnishings schedule years later from memory is exactly what Revenue asks to see when it queries a rental computation.
Pre-letting expenditure on a vacant property
Ordinarily, expenses incurred before a property is first let are not deductible. There is a specific relief for vacant residential premises: qualifying pre-letting expenditure can be deducted, capped at €10,000 per vacant premises, where the property has been vacant for the required period and is then let.
The cap rose from €5,000 to €10,000 with effect from 1 January 2023. The relief is subject to clawback where the property is withdrawn from the rental market within a set period, so it is worth understanding the conditions before relying on it.
Filing, and which form
| Situation | Return | Deadline |
|---|---|---|
| Rental profit is your main non-PAYE income, or it is substantial | Form 11 | 31 October following the tax year, or the ROS date in November |
| You are a PAYE worker with modest rental income | Form 12 may be sufficient | 31 October following the tax year |
| Property held through a company | CT1 | 9 months after the accounting period end |
For the 2025 tax year the pay and file deadline is 31 October 2026, extended to 18 November 2026 where you both file and pay through ROS.
Holding property in a company
It is a common question and the answer is usually no, for a small portfolio. Rental income in a company is non-trading income taxed at 25%, not the 12.5% trading rate, and undistributed rental income in a close company attracts a further 20% surcharge unless distributed within eighteen months of the period end.
Getting the money back out then costs again, as salary or a dividend. The structure can make sense at scale or where the objective is to accumulate and reinvest, but it is rarely the answer for one or two properties.
When you sell
A gain on disposal is subject to capital gains tax at 33% after the €1,270 annual exemption. Improvement costs you could not deduct against rental income are allowable here, which is why keeping that distinction straight over the years matters.
CGT payment comes before the return: tax on a disposal between January and November is due by 15 December of the same year, with the return not due until the following 31 October.