Taxes in Ireland - The ultimate thread guide

[Bruno751]

Hello guys, I've realised many people sharing the same doubts about Airbnb taxes in Ireland. I also have some, as this is going to be my first tax year. My goal with this thread is, with your help, consolidate all the information in regards to taxes in Ireland.

Here's what I know so far (I got that information from the tax guide of PricewaterhouseCoopers (PwC) that can be found at https://www.airbnb.ie/help/article/1378/responsible-hosting-in-ireland)

- How to submit your taxes: Via Form 12 or Form 11

- Due date: October 2019 (Deadline: 31st October)

- It is important to note that if you are registered for income tax you are required to pay preliminary tax. Preliminary tax is an estimate of the tax that you expect to pay in the following tax year. For example, when submitting your 2018 tax return in October 2019, you are required to pay the balance of tax due for 2018, in addition to this you are required to pay an estimate of the tax arising in the next tax year (2019). The preliminary tax you pay for 2019 will be credited against your final 2020 liability. (...) This type of income is taxable as either trading income (Schedule D Case I) or miscellaneous income (Schedule D Case IV) and is subject to Irish income tax.
- Apportionment can be done on a reasonable days basis. i.e. Assuming the electricity bill was 600 and you have rented 2 days per week (eg.: weekends). Thus: 2 days a weekend x 4 weekends = 8 days / 365 days a year * €600 = €13.

- The lower rate of income tax in Ireland is 20%. The marginal or higher rate of income tax is 40%. Depending on your circumstances the levels of income vary for each rate e.g. if you are married.

Doubts I still have:

1 - As we have to do our taxes in October, should I consider from November of last year till October of the current year?

2 - How do you calculate how much from the bills (e.g. gas) will you claim as relief? According to the instructions listed above, I get the full amount and divide by the number of the booking days, in order to find the value, but don't I have to discount my personal use of it?

3 - Do I need to provide proof of payment of each item I intend to claim as apportionment/relief? (e.g.: If I bought cleaning products, bed linen, breakfast items, etc).

4 - If I understood well about the preliminary tax, it means the first year I will have to pay the double of the taxes. So, If I'm at the highest rate, I will have to give to the government 80% of the year income. Is that true?

5 - If I buy an apartment, but with a mortgage. Can I do Airbnb in one of the extra bedrooms? (I know I cannot rent the full apartment, but what about the extra rooms? - I know you can rent for long-term, but I'm not sure about Airbnb, as it does get categorized as Treading or Miscellaneous income)

Please, let's share the information we have, in order to have an ultimate Ireland taxes guide here.

Thanks, everyone!

[Louise500]

Fantastic information. Thank you. 

Do do we get an income statement from Airbnb. Or is there a place for me to see my total income for 2018 in the hosting section of the App?

2018 was my first year hosting so I want to pay my taxes on the income I earned. 

Much appreciated. 

[Bruno751]

Hey @Louise0 - You can find it at Host > Progress. Then click at "Earnings".

[Bruno751]

One thing it's not clear to me yet. Will I pay 20% or 40% depending on how much income I do + Airbnb Incomes. Or will always be 40%, independently how much do I do within total incomes? 

I also saw some places that assuming the top personal tax rate, the amount to pay is 52%! (does it means for the first year, you have to pay 104%, due the Preliminary tax is an estimate?? 😮 Unbelievable if so.)

So complicated to find someplace with consistent information. A table, or something like that.

[Susan17]

Yep, Irish taxes are a killer, @Bruno751. You'll be taxed on your regular income plus your Airbnb income, which pushes most people into the 40% bracket, at least. 

This guy is probably one of the most knowledgeable on the Irish Airbnb tax situation - he's been dealing with it since the early days. Give him a ring if you need any advice. 

https://www.paddyquinn.ie/tax-implications-airbnb-hosts/

[Susan17]

@Bruno751 @Louise500 

Just FYI, the following is the information Airbnb provides to the Revenue in September of each year... 

[Bruno751]

Apparently, it's possible to declare Airbnb incomes through a company and pay a company tax rate of 12.5%. Check this out: https://www.paylesstax.ie/airbnb-tax-returns-how-to-calculate-tax-on-airbnb-earnings/#.XMgGTJNKh24.

Has anyone done that? If so, could please share how to?

[Bruno751]

Hello, here's another useful information on this matter.

Looks like the preliminary tax has to be paid only if your taxable net income exceeds 5k AND your gross income does exceed 30k.

This is the answer I got today from Revenue when I asked if I have to pay preliminary taxes: 

"

Dear Bruno

You do not need to register for self-assessment if:

1. you only have PAYE income

or

2. your taxable non-PAYE income does not exceed €5,000 and your gross non-PAYE income does not exceed €30,000. That income must be coded for PAYE purposes. ’Coded’ means the income is taken into account in calculating your tax credits and standard rate cut-off point for PAYE purposes. In this case, you must submit a Form 12 online through PAYE Services in myAccount.

(...)

Yours sincerely

PAYE Team

"

Am I interpreting it correctly?