Property Charges and Taxes

The last budget altered the threshold amount for the calculation of capital acquisitions tax. A person can now receive or inherit up to a maximum of 434,000 euros by a parent and still be exempt from capital acquisitions tax.

If a person receives an inheritance or gift from other family members, the capital acquisitions tax threshold is reduced to 43,400 euros. The threshold for gifts or inheritances from non-family members reduces to 21,700 euros. Gifts or inheritances between married couples are exempt from capital acquisitions tax.

The current capital acquisitions tax rate is 25 percent for inheritance or gifts received after the 8th of April, 2009.

Any income received from property rental is subject to income tax. Property owners are obliged to include any income from rentals on their annual tax returns, which have a deadline for self assessment. Revenue allows property owners some exemption for expenses incurred during the rental period and the latest details regarding these exemptions can be found on the revenue website or by contacting Revenue directly.

Exemptions are on a pro rata basis, so if a property owner partially rents out a houses or apartment, for example one or two rooms, then the property owner can only claim expenses for the part of the property actually rented out.

Any profits or gain that a property owner makes on the sale of a property, other than a main residence, is liable for capital gains tax. The amount of capital gains tax payable on the sale of a second or subsequent property is based on the difference between the original cost of the property plus any expenses incurred on improving it. It is vital that property owners retain receipts relating to any work done on the property in order to minimise liability to capital gains tax. The current rate of tax is 25 percent, although the first 1270 euros of profit is exempt from capital gains tax.

The Local Government (Charges) Act 2009 provides the details of the new 200 euro per property charge, payable by property owners on each property rented as at the 31st of July 2009. The payment is to be made to each local authority within whose boundaries rental properties and holiday homes lie.

Payment must be made by liable house and apartment owners to their local authority before the end of September 2009.

If payment is not received by the local authority by that date, they will impose a levy of 20 euro per month, starting from the first of November.

People living in their main residence are not liable for the property charge, nor are they liable if they receive rental income for one room in their main residence. However if a property owner rents out the entire house, then they will be liable for the entire charge.

Other exemptions from the new act apply to rooms in a main residence, or within two kilometers of a main residence which is occupied free of rent by a relative of the property owner.

The new property charge only covers second properties located in Ireland and overseas properties are exempt.

This article is only intended as a basic general summary and you should always seek professional advice where necessary. The latest details, terms and conditions regarding property charges and taxes will be found on the Revenue Commissioners website.



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