Tax on rental income

Hi everyone,

I'm a new non resident landlord who for the first time recently filed my tax return online for 2014. Rental income minus expenses was around €5k. During my return I indicated that I was a non resident and I entered the figure for the tax withheld that was submitted previously by my letting agent. After I submitted my tax return, revenue came back and adjusted my return to pay me back all of the tax that was withheld. I'm a bit confused by this. My understanding is that it works like the following example:

Rental income - 10k (Tax withheld 20% = 2k)
Expenses & repairs - 5k
Tax is 20% of profit (5k) = 1k
Balance = Tax withheld (2k) minus tax due (1k) which results in a 1k refund.

In my case, I was getting the 1k refund and then my return was adjusted by revenue to also give me back the 2k tax withheld.

Is this correct from revenue? Is it because my total profit comes in under a certain threshold that I am not taxed at all? It does't seem correct that I am not taxed at all. I also have foreign employment income which I did not declare on my return. The reason being is that I found when I did enter it on the return I was bring taxed on it in my final calculation but I have already paid tax on it in a country that has a tax agreement with Ireland so I presumed that this was meant for foreign income earned by residents of Ireland. Any advice would be greatly appreciated.

Regards,
Paul

Paul,

I think you already know the answer to your question.

You are taxable on rental income arising in Ireland.

As an Irish citizen, you are entitled to tax credits in the same proportion as your Irish rental income bears to your “world” income.

But, you did not declare your foreign employment.

If this rental income is ongoing, you should advise Revenue of your foreign earnings and have the position rectified.

He is non resident and his employment income abroad is not relevant. All he has to declare in Ireland is his Irish rental income, take away the costs, and he is also entitled to the allowances (except the PRSI one as he's not employed in Ireland).

Be VERY careful PaulD that you have registerd for other taxes/charges. ie NPPR, now gone, the household charge, now gone, Property tax and PRTB. Some of those have nasty stings tax wise.

Examples:

a) If you don't pay PRTB you are not entitled to deduct mortgage interest relief
b) if you don't pay the property tax you will be penalised on your full income, very nasty ! And some posters on AAM have had this happen to them. Time limits are very important and despite other posters stating otherwise I've this on DD so that I won't miss out on reminders etc.

Bronte,

As a non-resident Paul is not entitled to tax credits.

He may, under TCA 1997 s 1032(2), claim a portion of tax credits – in the proportion that his Irish income bears to his world income.

The problem here is that as he did not advise Revenue of his foreign earnings it was taken that the Irish rental income was his only income source and so the credits were not apportioned, but given in full.

He would still be entitled to a refund, but unless his foreign earnings were negligible he would not be entitled to a full refund.

Are you an accountant Sophrosyne?

I'm just going to look at last years returns.

1. The accountant needed the LPT confirmation to imput to revenue online as this is now compusory. He accepted a print out or I could give him my log in id's - different to the system where he does my revenue income tax online. And there was confusion because the charge date is different to the payment date (Nov in one year versus March the following year)

2. As a married couple we are under joint assessment,

3. We each get 3300 in Personal Tax Credit but this is done by the system, but because we are abroad we should not and it causes my accountant a problem with the systems that cannot recognise this, he is handling this directly with revenue. a) by writing a note in our return and b) by contacting them directly to fix it.

So you are correct about the credits.

4. Our foreign income here does not go on the form. Instead as makes sense it is taxed here where we are resident. On what basis do you think this is relevant to the Irish tax authorities?

5. PRSI on deposit interest is for 2013 - but not for non resident landlords.

6. This changes in 2014, on unearned income, so rents, But paying this PRSI gives us no PRSI benefits, unlike other trades, so it is actually another 4% tax.

7. USC - my head hurts, this is basically another tax and I couldn't begin to figure out the rules, perhaps you'd summarise. Due to the head sore I hired an accountant as a non resident with so many rule changes I decided to pay the professional. And I'd advise everybody else to do the same.

Foreign Tax number

In addition to our foreign address we had to in 2012 supply our foreign tax number.

The issue is claiming full credits.

As others have stated, a non resident is entitled to credits in the proportion that his Irish income bears to his worldwide income.

So if it's 1/10 of his worldwide income, he get a credit of €165 instead of €1,650.

I am not getting this. Crossed lines about tax credits or not.

So I am also a Non resident Landlord 1st time tax return for 2014 done. As requested I got tenant to deduct 20%. R185 form etc ect as needed.

I received a request to pay tax today with ( Non resident Self pay) on the letter. Is this possible ? I would much prefer this way as I would receive the full rent ever month and pay the following year. After a call to the tax office They seemed confused as me. They said they would contact the tenant. As no record of tax paid. This delays my tax return. So my last question is. Panel 8 there is a €1440 tax deduction or credit. Is that right for a non resident or did the tax office just get it all wrong ?

Thanks in advance.