How to Analyse a Property Investment in Ireland
Most property investors in Ireland focus on gross yield — annual rent divided by purchase price. A property renting for €1,500 per month (€18,000 per year) bought for €300,000 gives a gross yield of 6%. Looks solid. But gross yield ignores every cost that eats into your actual return, and in Ireland those costs are substantial.
Gross Yield vs Net Yield
Net yield strips out all operating costs: insurance (€300–€800/yr), management fees (8–12% of rent if you use an agent), maintenance (budget 1% of property value annually), RTB registration (€40 per tenancy), Local Property Tax, void periods (typically 2–4 weeks per year), and accountancy fees. A 6% gross yield often becomes 3–4% net. That's the number that matters.
Tax on Rental Income
Rental profit is taxed at your marginal rate — up to 40% income tax, plus USC of 2–8% and PRSI at 4%. A higher-rate taxpayer can lose over 50% of rental profit to tax. Mortgage interest is 100% deductible against rental income, which is why leveraged investors often show lower taxable profit. You can also deduct insurance, repairs (not improvements), management fees, and claim wear-and-tear at 12.5% per year over 8 years on furniture and appliances.
Cash-on-Cash Return
The metric experienced investors use is cash-on-cash return: your annual net income after all costs and mortgage payments, divided by the total cash you put in (deposit, stamp duty, legal fees, furnishing). This tells you what your actual invested cash is earning. A property with a modest net yield can still deliver a strong cash-on-cash return if you've used leverage well. Factor in capital appreciation — the long-term Irish average is roughly 4–5% nominal per year — and the total return picture becomes clearer.
Related tools: Rental Yield Calculator · Landlord Tax Calculator · Mortgage Stress Test