Property can be an investment but it also carries with it tax liabilities. These can be divided broadly into capital taxes and income taxes.

The first group relates to the purchase or sale of property. Under the Finance Act (no2) 2000, which implemented the third Bacon report, all second properties are liable to stamp duty of 9 per cent.

In addition, unless landlords register the property with the authorities, they will be liable to a 2 per cent per annum anti-speculative property tax for the first three years of their ownership of the property.

Finally, if and when the property is sold, the profit made on the transaction is liable for capital gains tax at 20 per cent. Only principal private residences - your home - are excluded.

Rental income is subject to income tax in the same way as all other earnings. However, you are allowed to offset expenses incurred in letting the property against your rental income before assessing liability.

Items such as letting and management fees, advertising costs, repairs and maintenance, insurance and the cost of any goods or service connected to the rental can be offset. However, following the first Bacon report, it is no longer possible to offset mortgage interest against rental income. You can still claim capital allowances for fixtures and fitting in the property - such as bathroom suites but not suites of furniture - over seven years.

The most important thing is to keep receipts, or have a management agent do it for you. If you are claiming costs against rental income, especially for occasional or one-off costs, the Revenue Commissioners may well look for receipts as proof of expenditure.

It is worth remembering that rental income on property in the State is liable for income tax regardless of the tax residence of the owner. Unless a management agent is in place, the onus for collecting this tax falls on the tenant. Tax must be deducted at the standard rate from the rent and returned to the Revenue. Landlords receive credit for this tax when they complete their annual return.

Tenants in the private sector should remember that they are entitled to a small measure of tax relief against their rent. People under 55 can claim relief of £750 per person (£1,125 for a widowed person) at the standard rate. Those over 55, or whose spouse is over 55, can claim relief of £2,000 (£3,000 if widowed) at the standard tax rate.