C&AG: Revenue finds almost half of landlords underdeclared their rental income tax

In 2020, Revenue’s personal division started a targeted project on landlords that ran until 2024 that yielded just over €7m in additional tax, interest, and penalties. However, Revenue wound down the project in 2024. File photo

A project on landlords carried out by Revenue identified that 46% of cases reviewed had underdeclared their rental income tax by overclaiming rental expenses.

The finding is included in the latest annual report published by the Comptroller and Auditor General (C&AG). In 2020, Revenue’s personal division started a targeted project on landlords that ran until 2024.

The project focused on landlords with three or more properties that may have underdeclared taxable rental income by overclaiming rental expenses.

Between 2020 and 2024, the division carried out a total of 884 interventions. Around 46% of the cases yielded just over €7m in additional tax, interest, and penalties, at an average of €18,000 per case.

However, Revenue wound down the project in 2024. “Despite yielding €1.3m from 35 cases in 2024, the project is no longer running," the C&AG noted.

“Revenue stated that the project focus has moved to identifying landlords who have not declared receipt of rental income, including cases of egregious non-compliance.”

Following the introduction of the rent tax credit in 2022, tenants claimed a total of €181m and €208m for the tax years 2022 and 2023 respectively, the report noted.

The rent tax credit was introduced in Budget 2023 and is available to tenants for the tax years 2022 to 2025. The credit reduces the amount of income tax payable for a tax year, provided the taxpayer has an income tax liability to offset the credit against.

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During a six-year period, 2017 to 2022, gross domestic rental income declared by individuals and companies increased steadily, the report notes. 

The fastest rate of increase identified was in respect of rents declared by companies, which increased by 61% from 2020 to 2022.

In 2022, gross domestic rental income declared was around €8bn comprising €4.8bn declared by individuals and €3.2bn declared by companies. 

"Most rental income declared by companies relates to commercial properties, while individuals primarily declare rental income from residential properties." 

Revenue should consider publishing rental income statistics for companies, the C&AG recommended, to enhance transparency.