Dáil Éireann Debate, Thursday - 18 July 2013
201. Deputy Joanna Tuffy asked the Minister for Finance if he will provide an update on taxes and PRSI payable by those in receipt of rent for dwellings, including reliefs, and any changes arising out of budget 2013; and if he will make a statement on the matter. [36755/13]
View answerIndividuals who receive rent for properties are liable to Income Tax and USC on the income. In the previous Budget I announced that the Minister for Social Protection, Ms. Joan Burton, T.D., would be bringing forward legislation to change PRSI contributions as follows:
- Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI with effect from the 1st of January 2013.
- Unearned income for everyone else will become subject to PRSI in 2014. This means that PRSI will be payable on income generated from sources such as rent, investments, dividends and interest on deposits and savings.
This means that from this year, modified rate contributors who have income from a profession or trade and who were previously not liable to PRSI on that income, are now liable to PRSI at 4% on such income. From next year, all assessed taxpayers, that is, taxpayers who are in the self-assessment system, will be liable to PRSI on their full incomes including rental income, investment income, dividends and interest on deposits and savings.
I should point out that PRSI is a matter for the Department of Social Protection in the first instance. However, it is my understanding that; in general, social insurance applies to persons over the age of 16 years and under pensionable age, which is currently age 66 years.
Those aged 66 years and over are not liable to pay PRSI on any of their income including their unearned income. Accordingly those over 66 years will not be impacted by the proposal to apply PRSI to unearned income such as interest on savings, shares and rents.
It should be noted that the Revenue Commissioners have published a guide to the income tax treatment of rental income. It sets out the amount of rental income to be taken into account for income tax purposes and provides a comprehensive list of expenditure items that are allowable for deduction in computing the rental income for income tax purposes, which can be obtained at the following link: http://www.revenue.ie/en/tax/it/leaflets/it70.html.
