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As the next third level college season gets underway, landlords who let their properties to students need to adhere to the current tax rules reminds ACCA (Association of Chartered Certified Accountants).

Aidan Clifford, ACCA’s Advisory Services Manager, said: “Many students taking up places in universities, Institutes of Technology and other third level colleges will be renting accommodation from private landlords.  These landlords need to be aware that they will be targeted by Revenue if they do not abide by the correct tax rules”.

“Tax rules for renting out property are complex, issues such as registering with the Private Residential Tenancy Board (PRTB), pre-letting expenses, rent pooling, restrictions on interest relief, the special student accommodation property schemes, the restrictions on the types of expenses that can be claimed, wear and tear allowances, “second home” tax, PRSI and income levies all need to be considered.”

Private landlords should visit the Revenue Commissioners website at www.revenue.ie  for further information.  Registration with the PRTB needs to be done within 1 month of the tenant moving in and the second home tax needs to be paid by the end of September.   Landlords could also seek the advice of a local qualified chartered certified accountant, found at www.accaglobal.com for further support.

For further information, please contact:

Aidan Clifford, Advisory Services Manager, ACCA Ireland - 087 2470205
Barbara Elliott, Touchstone Communications – 087 2933580

Notes to Editors
1. ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We have 493,500 students and members in 170 countries worldwide. ACCA Ireland has over 20,000 students and members
2. ACCA has worked with governments, national organisations and development agencies in emerging economies- for over 20 years- promoting the accounting profession, to create value for the communities, businesses and individuals it serves.
3. ACCA believes that globalisation of business means that one set of reporting standards is essential. We favour the principles-based IFRS.
4. ACCA understands the real issues facing small businesses as 63,000 of our members work in SMEs or small partnerships worldwide.

Journalist briefing
The taxation rules in respect of property letting are particularly complex.  Availing of any of the tax incentives for the construction of student accommodation in particular, has a number of pitfalls.  Many landlords do not realise that even though they may have losses for income taxation purposes, they may still have to pay PRSI and income levies.  Also in an era of negative equity, if they sell a tax incentive property they may end up with a very large income tax bill when the tax incentive is clawed back.  Even though the investor has a capital gains tax (CGT)  loss on the sale of the property the CGT loss can not be offset against any income tax payable.  If an investor has a number of student properties, (say an apartment block with 5 or 6 students apartments), if some of the apartments are vacant then not all of the expenses for the whole block may be allowable as a tax deduction.

The second home tax is also payable at the rate of €200 per property and interest paid on a mortgage is only 75% allowed as a deduction against the rent received.   If the property is not registered with the Private Residential Tenancy Board (PRTB) then none of the mortgage interest is allowed as an offset against the rent.  The ESB and PRTB have said that they will be sharing information with Revenue on rented and second homes and Revenue will therefore be in a position to identify rental property that has not been registered with the PRTB or property where no return of rental income was made. 

Revenue have a number of booklets on rental income
http://www.revenue.ie/en/tax/it/leaflets/it70.html#section5
Student accommodation booklet
http://www.revenue.ie/en/practitioner/tech-guide/stud_accom.pdf
Section 23 Relief booklet
http://www.revenue.ie/en/tax/it/leaflets/s23.pdf