Dáil Éireann Debate, Tuesday - 17 February 2026
492. Deputy Michael Cahill asked the Tánaiste and Minister for Finance if he would consider reviewing the 52% tax rate on short term lets/long term lets, and reducing this rate so as to encourage people to remain in the letting business, and encourage others to get involved; and if he will make a statement on the matter. [12640/26]
View answer501. Deputy Michael Cahill asked the Tánaiste and Minister for Finance if he will consider reducing the rate of taxation on rental income as a means of stimulating supply in the rental market (details supplied); and if he will make a statement on the matter. [12760/26]
View answerI propose to take Questions Nos. 492 and 501 together.
Landlords are an essential feature of a functioning housing market. Rising rents are driven by a shortage of supply, so stabilising and increasing the supply of rental properties should ease upward pressure on rental prices and make it easier for prospective tenants to find affordable homes.
Revenue advise that while rental profits may be subject to income tax, PRSI and USC totalling 52% at an individual’s marginal rate, the effective rate will in most cases be lower, when taking into account amounts taxed at the standard rate of income tax and depending on the circumstances, the reliefs, credits and deductions can be taken from rental income in arriving at rental profits for tax purposes.
Revenue further advise that income from renting Irish property is taxed under what is known as Case V of Schedule D, and the amount subject to tax is the rental profits calculated after taking the deductions allowed under section 97(2) Taxes Consolidation Act 1997, which are: rent payable by the landlord for the rental premises; rates payable by the landlord for the rental premises (but not Local Property Tax); the cost of goods and services in relation to letting the property; the cost of maintenance, repairs, insurance and management of the property, excluding capital expenditure; and interest on money borrowed to purchase or improve the premises, so long as the landlord meets the registration requirements under the Residential Tenancies Act 2004.
A landlord may be able to claim capital allowances for capital expenditure under section 284 TCA; pre-letting expenses under section 97A TCA; and retrofitting expenditure under section 97B TCA. Landlords who are individuals and who are letting residential premises can also claim the residential premises rental income relief under section 480C TCA, which is €800 for 2025 and €1,000 in 2026 and 2027.
Section 216A TCA provides that, if a landlord is letting a rent a room or rooms in her own sole or main residence and the amounts received for rent and other services (such as laundry or meals) does not exceed €14,000, the sums are fully relieved from income tax under “rent-a-room” relief.
The Deputy mentioned short term lets, Revenue also advise that income for providing short term accommodation for occasional visitors, such as through an online accommodation booking system, is not considered rental income under Case V and is taxable as “trading income” under Case I if operated as a trade such as a guesthouse or as “other income” under Case IV if it is occasional income.
I am further advised by Revenue that whether the profits or gains from the provision of accommodation arise in the course of a trade is a question of fact having regard to the particular facts and circumstances of each case and also having regard to the ‘badges of trade’ and case law. For the provision of short-term accommodation to be characterised as trading, the person should be involved in actively letting out the property on a commercial basis with a view to the realisation of a profit.
In general, persons who provide short term accommodation on a once-off, casual or occasional basis will not be regarded as carrying on sufficient activity so as to constitute a trade. Where the profits or gains from the provision of accommodation are not chargeable to tax under Case I on the basis that the person is not considered to be carrying on a trade, they are chargeable to tax under Case IV.
With regard to the Deputy’s reference to the Tax Strategy Group (TSG), it should be noted that papers on various options for tax policy changes are prepared annually by Department of Finance officials. The TSG is not a decision-making body.
It may be of interest to the Deputy that the taxation of rental income was considered as part of the 2022 TSG process with further details set out in chapter 7 of the "Property-Related Tax Issues Tax Strategy Group – 22/04 July 2022" paper, available at the following link:
https://assets.gov.ie/static/documents/tsg-22-04-property-related-tax-issues-4b78c888-4c5a-4642-9f8b-5a28c181ee1a.pdf.
