First-Time Buyer Tax Essentials – Part 4: Ongoing Annual Tax Obligations

Congratulations — you’ve crossed the finish line, and the keys to your new home are in hand! As a homeowner in Ireland, there are several important ongoing tax responsibilities you need to be aware of. In this article, we’ll walk through three key areas to keep on your radar:

1. Local Property Tax (LPT)
2. Income Tax If You Rent Out Part of Your Home
3. Capital Gains Tax (CGT) If You Sell in the Future

1. Local Property Tax (LPT): What It Is and How It's Calculated

The Local Property Tax is an annual self-assessed tax charged on the market value of all residential properties in Ireland. Even if you’re a first-time buyer, once you own the property, you’re responsible for making this payment each year.

How is LPT calculated?
LPT is based on the market value of your property as of 1 November 2021, which applies for the years 2022 to 2025. Properties fall into valuation bands, and your annual charge is based on which band your property falls into. The base rate is set by Revenue, but your local authority can adjust this up or down by up to 15%.

What do you need to do?

• Ensure your property is registered for LPT through Revenue’s online system.
• Pay by the annual deadline (usually January 15th, unless using phased payment options).
• Update Revenue if you make significant improvements or changes to your property.

2. Renting Out a Room or Part of Your Home: Income Tax Implications

Many first-time buyers eventually consider renting out a room to help with mortgage costs. The good news? Ireland offers a “Rent-a-Room Relief” that can allow you to earn tax-free income, within limits.

Here’s how it works:

• If you rent out a room in your principal private residence, you can earn up to €14,000 per year tax-free (as of 2025).
• You must not be renting to your spouse, civil partner, or child.
• The room must be used for residential purposes, not for business or short-term letting (like Airbnb).

To claim this relief:

• You must opt-in by declaring the income on your annual tax return (Form 11 or Form 12).
• If you earn above the threshold, the full amount becomes taxable, not just the excess.

3. Capital Gains Tax (CGT): If You Sell in the Future

You might not be thinking about selling yet, but it’s good to understand the tax implications down the line.

Will you owe CGT when you sell your home?
Generally, no, if it’s your Principal Private Residence (PPR). You’re likely exempt from CGT provided:

• You lived in the property as your main home throughout the ownership period.
• The grounds are under one acre.
• You’re not using the property for business purposes.

But watch out for exceptions:

• If you rent out the property at any point (or a portion of it), the gain during that period may be partially taxable.
• If you move out before selling, you may still qualify for some relief — the last 12 months of ownership are typically exempt, even if you’re not living there.

Planning ahead is key. If you know a sale is on the horizon, consult a tax advisor to clarify your position and calculate any potential CGT liability.

Final Thoughts

Becoming a homeowner comes with a sense of independence — and a few new responsibilities. From filing your LPT on time to considering the tax impact of renting or selling, staying informed now can save you a lot of stress later.

Contact us today if you would like to know more about any of the topics discussed in this article.

Check out part three of the series here in case you missed it.