Irish short term lets: why the tax label matters

Short term letting in Ireland has grown quickly. Professional landlords and second-home owners are now asking a simple question: how is this income taxed, and is there a better way to structure it?

The answer is not just about rates. It is about which “bucket” your income falls into:

• standard rental income
• short stay income that is not a tenancy
• a fully-fledged hospitality or serviced-accommodation trade

Each category has different rules on what you can deduct, which rate applies and whether a company structure helps. This guide walks through the big picture so you can have a better conversation with your accountant.

This is general information only, based on public guidance as of 2025. Always get personalised advice before changing structure or filing returns.

Thinking about switching a long term rental into short stays but unsure how it will sit for tax and admin?

How long term rental income is taxed in Ireland

If you let a residential property on a normal long term basis, your income is usually taxed as rental income, under Case V of Schedule D.

For an individual landlord:

• You start with gross rent received in the year.
• You deduct allowable expenses such as mortgage interest (where permitted), repairs, insurance, management fees and certain local charges.
• The resulting rental profit is taxed at your marginal income tax rate, currently 20% or 40%, plus USC and PRSI.

A higher-rate taxpayer with €30,000 of rental profit could easily see a combined effective rate in the mid-40s once USC and PRSI are included, depending on their wider income and credits.

For companies:

• Rental profit is usually treated as passive income.
• It is taxed at the higher corporation tax rate of 25%, not the 12.5% trading rate.
• If the company is a “close company” and leaves rental profits undistributed, a surcharge can apply, pushing the effective rate towards 40% on retained profits.

So under standard rental rules, holding property in a company does not automatically lower the tax bill.

Want to see how your current rent compares with what a managed short-let could earn on the same property?

How Revenue treats short term lets that are not tenancies

Short stays are different. If you offer your property on a nightly or weekly basis through platforms, guests usually get a licence to occupy, not a tenancy. The stay is closer to holiday accommodation than to an assured letting.

Irish Revenue guidance draws a clear line:

• Income from classic residential tenancies is Case V rental income.
• Income from short stays that are not tenancies is not Case V rental income. It is taxed under other parts of the tax code (for example Case IV) unless it forms part of a trade.

That has two big consequences for many casual or secondary-home hosts:

1. Expense relief can be more restricted.
   You may be allowed to deduct direct running costs such as platform fees, cleaning and utilities, but not the full range of overheads or capital allowances that apply to rental or trading income.
2. There is no special lower rate.
   The income still falls into your income tax computation, and profits can be taxed at 20% or 40% plus USC and PRSI, depending on your overall income.

In other words, simply swapping a long term tenant for occasional short stays will not automatically turn your income into low-tax trading profits.

Already earning short stay income and finding the day to day work and record keeping heavy?

When short term letting starts to look like a trade

At the other end of the spectrum you have operators who run short term letting as a business, not a side activity. Typical features include:

• multiple properties under management
• organised systems for bookings, marketing and revenue management
• regular cleaning, linen changes and guest support
• possible extra services such as breakfast, local experiences or concierge

Where the activity looks like a genuine hospitality or serviced-accommodation business, Revenue may accept that the profits are trading income rather than passive or miscellaneous income.

If that is the case:

• Individuals can claim a wider set of trading deductions and capital allowances, subject to the usual rules.
• Companies may be able to apply the 12.5% trading corporation tax rate to these profits, instead of the 25% passive rate, if the company is clearly carrying on a trade.

The facts matter. Two landlords with the same gross income could be taxed very differently based on how active they are, what services they provide and how the business is structured.

Is your setup starting to look like a full hospitality business?

Read our step-by-step guide to building an Airbnb business from scratch →

Company structures for Irish short term lets

Running short term accommodation through an Irish company is common among professional landlords. From a tax perspective, think about three questions:

1. Is the company truly trading, or just holding property?
   Trading profits can qualify for 12.5% corporation tax. Passive rents and some short stay profits may still be taxed at 25%.
2. Will profits be distributed, or left in the company?
   • If profits are distributed as salary or dividends, personal tax will arise for the owners, which narrows the gap between personal and corporate routes.
   • If profits are retained, close-company surcharges can apply to passive or rental income.
3. How does this interact with your wider planning?
   Company structures affect inheritance planning, access to funds for personal use and how gains are taxed on a future sale of the property or of the company shares.

For many higher-rate taxpayers, a well-run short term letting business in a company can lead to a lower combined tax burden on retained profits, but only if the activity is clearly trading and the structure suits their wider plans.

Looking for a wider view of how short lets fit inside a long term investment plan?

See our guide to property investment strategies and structures →

Simple number sketch: personal vs company taxation

To see how much classification matters, take a simplified example with €30,000 profit from one property. This ignores USC, PRSI, tax credits and surcharges, so it is only for rough comparison.

• Individual, higher-rate tax band
  • Profit taxed at 40% income tax
  • Approximate tax: €12,000
• Company, genuine trading profits at 12.5%
  • Corporation tax: €3,750
  • €26,250 left in the company before any salary or dividends
• Company, profits treated as passive or rental at 25%
  • Corporation tax: €7,500
  • If profits are not distributed, a close-company surcharge on rental income could push the effective rate towards 40% on retained profits.

These rough numbers show why many professional landlords look carefully at trading status and company structures. But the full picture will need to factor in:

• how you take money out of the company
• how many properties you own
• your other income and reliefs
• long term capital gains and succession plans

Want to explore more examples of how tax can change your real returns?

Read our breakdown of the main tax benefits available to investment property owners →

Other Irish tax angles for short term lets

Tax on short term accommodation does not stop at income or corporation tax. A few other points to keep on your radar:

• USC and PRSI
  Profits taxed as personal income generally carry USC and PRSI in addition to income tax. For unearned income, PRSI is usually at 4%, rising slightly from late 2024.
• VAT
  Letting of residential property is normally exempt from VAT, but more hotel-style accommodation can fall within the VAT net. If you cross VAT thresholds or supply significant services, your accountant will need to check the position.
• Capital Gains Tax (CGT)
  Selling the property can trigger CGT at 33% on gains for individuals, or corporation tax on chargeable gains for companies.
• Local Property Tax and Vacant Homes Tax
  These apply based on ownership and use of the property, not on whether you let long term or short term, but they affect the overall economics.
• Local rules and registers
  Short term letting rules at planning and registration level are evolving in Ireland. Any change in use may have planning and local compliance consequences, separate from tax.

Are you thinking about selling or restructuring your portfolio?

Our capital gains tax guide walks through the key points property owners should understand first →

Questions to ask your accountant before you change strategy

Before switching from long term rents to short stays, or before setting up a company, it is worth sitting down with a tax adviser and asking:

1. For my current setup, is income treated as rental, other income or trading?
2. If I move into short term lets, how is that likely to be classified based on the services I provide?
3. Would a company structure help in my specific case, once we factor in how I need to extract cash?
4. How do USC, PRSI, close-company rules and CGT affect the overall picture over the next five to ten years?
5. What records and systems do I need in place to support whichever treatment we agree is correct?

Going through these questions now can avoid unexpected tax bills and give you a more realistic view of net returns.

Local Irish partners who do this every day

Short-term lets and trading income are not just about tax. You also need a team who understands how to protect your asset on the ground in Dublin, Cork and Limerick.

▶️ Watch: How our Ireland partners manage 70+ short let properties

In this short video, David, one of our Ireland partners, explains how his team:

• Manages more than 70 homes across Dublin, Cork and Limerick
• Treats each property as part of a host’s long-term nest egg, not “just another listing”
• Vets guests, enforces house rules and blocks risky one-night party bookings
• Uses a local network of tradespeople to handle maintenance quickly

If you are weighing up a move into short-term lets, this is a good example of what professional, locally managed hosting looks like in practice.

Bringing it together

Short term letting in Ireland can be a powerful way to use a second home or investment property, but the tax label matters just as much as nightly rates and occupancy.

Standard rental income, short stay income and trading profits all sit in different parts of the tax code and can be taxed at very different rates. The right answer for one landlord will not be right for everyone.

If you want help understanding the operational side of short term letting while your adviser handles the tax planning, Houst can manage the day-to-day work, from listings and pricing to guest support and cleaning, so you can focus on the bigger picture.