Dáil Éireann debate -
Tuesday, 30 Sep 2003

Vol. 571 No. 1

Written Answers. - Tax Code.

John Cregan

Question:

377 Mr. Cregan asked the Minister for Finance the situation in relation to an Irish citizen living in the UK, with a house let here earning rental income and if such a person should be taxed on the income; if so, the place of payment; if such a person has any tax allowance or tax credit here in addition to their UK situation; if such a person can be deemed to qualify for any reduction in tax liability or qualify for a carer's tax credit, if the house is let to an elderly relative who has difficulties and whose care would fall on the State and the original or family home is not made available or let to him. [20680/03]

Minister for Finance (Mr. McCreevy)

An Irish citizen living in the UK with a source of rental income in the State is liable to Irish income tax on the profit rent and may also be liable to income tax in the UK on the same income if resident in the UK for tax purposes. However, the Ireland/UK double taxation agreement provides that the UK tax authorities, when determining the extent of any UK tax payable, must allow credit for any Irish income tax paid.

The "profit rent" is the gross rent less allowable expenses. Such expenses include: insurance, rents and rates payable by the landlord in respect of the property; maintenance costs such as cleaning and general servicing of the premises; interest paid on moneys borrowed for the purchase, improvement or repair of the property; cost of any services provided by the landlord, e.g. gas, cable TV; accountancy and legal fees incurred in connection with the letting; repairs and maintenance of the property; and wear and tear on furniture and fittings i.e. carpets, cookers etc.

A non-resident individual with Irish source income is entitled to claim tax credits in accordance with the provisions of section 1032 of the Taxes Consolidation Act 1997. This section provides that the non-resident is entitled to claim a proportion of the personal tax credits to which he or she would be entitled if he or she were resident in Ireland. The proportion of tax credits is determined by reference to the individual's income in the tax year which is subject to Irish tax and the individual's worldwide income for the year.

Finally, the individual would not be entitled to claim the home carer's tax credit if the house is let to an elderly relative as it is a requirement that the claimant must reside with, or be in close proximity to, the relative.