Interest Relief for Individuals
Rented Residential Property
Tax relief available for interest paid on borrowings used to
purchase or improve rented residential property was restricted
to 75% of the amount of interest paid and this applied to both
new and existing borrowings. 100% interest relief is available
for commercial properties.
Following a change in Finance Act 2016, full deductibility for
interest on residential property loans was being phased in over
five years – in 2017, 80% is allowable and this increases by 5%
per annum (i.e. 85% is allowable in 2018) until full deductibility
was due to be available in 2021. Following a change in Finance
Act 2018, full deductibility has been restored for 2019 (i.e. two
years earlier than planned in Finance Act 2016).
An individual is required to register any properties let with the
PRTB in order to qualify for interest relief on rented residential
As a general rule, pre-letting expenses are not allowable.
However, in a move to address the shortage of properties in the
private rented sector, a deduction will be available from 25
December 2017 for expenses of a revenue nature incurred on a
property which has been vacant for a period of twelve months
or more. The property must be let for at least four years to avoid
a clawback of the relief, which is subject to a cap of €5,000 per
property and is available for qualifying expenditure incurred up
to the end of 2021.
There are restrictions on non-active partners in respect of
the offset of losses, interest and capital allowances
against non-partnership income. Relief is available to
non-active partners for offset against income of that
partnership only and is limited to each partner’s capital
contribution to the partnership. The restrictions apply to
interest paid, capital allowances in respect of expenditure
and losses arising in a trade. The restriction is €31,750,
which is the maximum that may be offset against other
sources of income outside the partnership.