Consider becoming non-resident
If you are domiciled and resident in the Republic of Ireland for a tax year you are liable for Irish income tax on your earnings from all sources around the world.
Your residence status for Irish tax purposes is determined by the number of days you are present in Ireland during a given tax year.
You are a resident in Ireland for tax purposes if either:
- you spend 183 or more days in Ireland in a tax year, or
- you spend a total of 280 or more days in Ireland spread over the current and previous tax year.
A “day” for residence purposes is one which you are present in Ireland at midnight. All visits, including holidays and weekends, are included when computing the days spent in Ireland but in the second case, visits amounting to not more than 30 days in a full tax year are ignored.
In order to avoid Irish tax, you would also need to shed your “ordinary residence'‘. If you come to Ireland for the first time and remain resident for three consecutive years you will become ordinarily resident from the beginning of the fourth tax year. Conversely you will cease to be ordinary resident in Ireland having been non resident for three consecutive tax years.Invest in a company and claim interest relief on borrowings
Individuals who take out loans to invest in a trading company or a property letting company, or in a holding company that holds shares in either of the former two companies may claim tax relief for interest paid on money borrowed. The money must be used to buy shares in the company. This relief is not allowed where you also claim BES relief.
Invest in tax-free savings
The interest from certain savings are exempt from tax such as savings bonds, savings certificates and National Instalment Savings Schemes with An Post.
Shelter rental income by claiming capital allowances on a commercial premises in a tax incentive area
Landlords of commercial premises in a renewal incentive area are entitled to a tax deduction against their rental income of 50 per cent of the construction cost in year one, 4 per cent for each of the next 12 years and 2 per cent in the final year. The maximum amount of the allowance that can be offset against non-rental income is €31,750.
Hotel landlords cannot set any part of the allowance against non-rental income. This restriction does not apply to a hotel in an area of Cavan, Leitrim, Mayo, Monaghan, Roscommon or Sligo that is not a resort area.
Shelter rental income by buying residential properties in tax incentive areas
Certain expenditure incurred on the construction, refurbishment or conversion of a house or flat for letting is allowable as a deduction against all Irish source rental income.Thus you can deduct the construction cost of section 23 properties, which are located in tax renewal incentive areas, i.e. designated towns and streets, approved student accommodation, and park-and-ride facilities, against all source of Irish rental income. This deduction reduces your rental income for the tax year in which you bought the property. Any unused amount is carried forward against Irish rental income in the following tax year.
The certificate that you receive from the developer after buying the property will verify your entitlement to the relief.Claim rent-a-room relief
Income from letting rooms in your home is exempt if the income does not exceed €7,620 a year. For example, rent from foreign students lodging in your home during the summer is tax exempt. The relevant capital gains tax and stamp duty provisions are not affected. Tax relief at source on your mortgage will also not be affected
Donohue & Co. provide expert advice on the most appropriate means for each of their clients to invest in the most financially rewarding manner to reduce their tax liability.