As a landlord or property investor, staying abreast of the latest tax reliefs and strategies can significantly impact your bottom line. The ever-evolving landscape of landlord taxation requires a keen eye on current regulations to optimise your property holdings.
In Landlords Tax Returns – What You Need To Know 2023, Brendan Allen explores some of the most recent tax reliefs that could save you money. This session was aired during CPD Fest in association with Swoop and will be live again on the 14th of December. For more information please click here.
PRSA Employer Contributions
One of the most notable changes is the allowance for deductions on Personal Retirement Savings Account (PRSA) employer contributions. If you're a director or an employee of a company, and your employer sets up a PRSA-style pension, the contributions made by the employer are now considered an allowable deduction. This development can lead to substantial savings, particularly for those involved in property management companies.
Generous Grants for Energy Efficiency Retrofits
The introduction of grants for energy efficiency retrofits is another area where landlords can benefit. The Sustainable Energy Authority of Ireland (SEAI) offers grants that landlords can combine with a deduction of up to €10,000 for fitting energy-efficient features such as insulation. This not only improves the property's value and appeal but also provides immediate tax relief.
Many landlords overlook the potential tax relief from capital allowances on fixtures and fittings within their rental properties. By keeping a detailed inventory and documentation, including receipts for white goods, sanitary ware, and bedroom furniture, you can claim these allowances over eight years at a rate of 12.5%. This relief can be significant and should not be ignored.
Rental Availability Schemes
Engaging with local authority rental schemes like the Rental Accommodation Scheme (RAS) can guarantee rent and offer a stable income stream. These schemes set the market rent and review it biennially, ensuring you receive consistent payments. Additionally, the Enhanced Leasing Scheme offers 95% of the market rent for properties leased for 25 years, providing long-term security and financial benefits.
Reduced Holding Periods for Capital Gains Exemptions
Recent changes have seen the reduction of holding periods for certain capital gains tax exemptions. For example, if you purchased a property within a specified period and held it for seven years, you could be eligible for significant relief on the gain when selling the property. This strategy encourages landlords to keep properties in the rental market while offering a tax-efficient exit strategy.
Smart Structuring: Holding and Rental Companies
For those with multiple properties, setting up a holding company and separate rental companies can de-risk your portfolio and potentially avoid the close company surcharge. This structure allows for more strategic tax planning and can protect your assets in the event of a downturn in one sector of your business.
If you have spare space in your home, such as a converted garage, you may qualify for rent-a-room relief. This scheme allows you to earn tax-free income up to a certain threshold by renting out part of your residence. It's essential to claim this relief on your income tax return to take advantage of the benefit.
The landscape for landlord tax reliefs in 2023 offers numerous opportunities to reduce your tax liability and enhance the profitability of your property investments. By staying informed and utilising these strategies, you can make smarter property transactions that align with your financial goals. Always consult with a tax professional to ensure you're making the most of the available reliefs and complying with all reporting requirements.
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article. The information at the time of publishing was accurate and could be subject to final changes.