Step by step guide on calculation rental profits(Case V)

Rental Income

Less rental expenses

Net rental income

Less: Capital allowances

Less: Case V losses carried forward

Taxable profit

Rental Income

A separate computation (gross rent less rental expenses) is required for each letting.

Rental expenses

Section 97 TCA 1997 provides that the following costs are deductible in the calculation of rental profits provided always that such costs are revenue rather than capital in nature:

(a)  rent payable by the landlord in respect of the property being let,

(b)  rates levied by a local authority in respect of the property being let,

(c)  costs that the landlord is obliged to incur under the lease,

(d)  maintenance, repairs, insurance and management of the premises being let and

(e)  interest on borrowings used for the purchase, improvement or repair of the premises.

Capital allowances

Once the aggregated surplus or deficiency has been identified, the deduction of capital allowances is the next step in the Case V calculation

Case V losses carried forward

A loss incurred in respect of a Case V letting can be carried forward indefinitely for use in future years.