Living in Australia - Renting houses in Dublin - 20% Withholding Tax

Oztastic

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Myself and my wife have been living in Australia since 2008 & have made no tax declaration in Ireland since then. In the meantime we've both signed up to the PRTB, NPPR, Household Charge & Property Tax. We both have houses at home.

I've seen some other posts on the forum relating to the Form 11. I've checked the form and see that for 2013, it's due by the end of this month. Rather than burying our heads in the sand for any longer I'm thinking of making a return for both properties for the 2013 financial year, carrying on in this vein.

What's a ballpark figure for getting a tax accountant to do this on our behalf, for both properties? We've no other income in Ireland.

On another point - both properties are with a Property Management company at home. They pretty much just get the tenants and leave the rest of it up to us. Now my wife is looking for them to take it on fully. They've explained that there's a 20% Withholding Tax for non Irish resident landlords. What exactly do they do with the amount collected? I presume they take their fee out of it and then wait till we've declared the income to revenue? My wife's mortgage is currently 1700 Euro per month. She's currently getting 1000 Euro Rent. From a revenue point of view what effect does this have on what is owed from a rental perspective? Does it limit the tax owed or is it seen purely as income, regardless of the profit or loss that's being made from the property.

If anyone's got any insight into where we currently stand and the best way to go forward it would be great to hear.

Cheers!
 
Hi Oztastic

To give you an idea, we would normally charge about €200 plus vat for rental income returns.

Tenants are supposed to deduct 20% of the rent they pay to non resident landlords. This gets paid to Revenue and goes towards your income tax liability. You then either pay the balance or get refunded the difference.

Their fee etc would be separate

You can appoint an agent in the state. In this case the tenant does not have to deduct anything from your rent.
Your agent then takes responsibility for submitting the tax return on your behalf.
The agent can be a friend/family member - most accountants also offer this service.

Hope this information helps

By the way - you probably should return all information from the date you started to rent the properties.
 
Thanks for that Tomorrow

Can you give me an indication of what the income tax liability / refund would be in my wife's case?

If the management company pay 20% (2400 Euro - 200 per month x 12, based on a rental of 1000 Euro per month) to revenue and that's the only income she has, is she then due a refund? The management company charge 7% of the yearly rental and there would be some minor maintenance costs. As mentioned previously, the mortgage costs over the course of the year are 20400 Euro.

400 Euro + VAT seems reasonable for both returns.

Cheers!
 
On another point - both properties are with a Property Management company at home. They pretty much just get the tenants and leave the rest of it up to us. Now my wife is looking for them to take it on fully. They've explained that there's a 20% Withholding Tax for non Irish resident landlords. !

You'd want to be very sure they are a reputable company.

Based on your rent of 12K and mortgage of 20K, even with 75% of mortgage interest being allowable, plus the other costs its unlikely that your wife will owe any tax.

You didn't ask, but it's not looking like a profitable investment with only 10K in rent and 20K in mortgage payments. And you've been gone since 2008. Is there a financially sound reason for holding onto the property.
 
Thanks Bronte

It's Property Partners. I'll have to check how they manage the 20% they hold onto. I'm guessing they'll recommend an accountant. I'm sure it's all above board.

They've looked after my property and my wife's since we left. I'm not as badly off. My place has a 1350 Euro Mortgage and gets 1250 Euro Rent. The guys at Property Partners are looking at getting new tenants into my wife's place, paying 1250 to 1300 pm. It's not looking as bad then over the year, hence the reason for holding on. You're right though, till now it certainly hasn't made sense to hold onto.
 
On your point - "Is there a financially sound reason for holding onto the property"

Apart from the obvious (currently yearly shortfall of at least 8400 Euro) is there a rule of thumb that's worth using when working out if it makes sense to cut our losses or continue?

At the current rate that's probably a "no" but at 1250 or more, even with the 7% Property Management fee, it appears to be worth holding onto.
 
'Can you give me an indication of what the income tax liability / refund would be in my wife's case?'

Really hard to comment without seeing the figures.
 
Are you able to PM me Tomorrow?

I'm not able to PM you - I see I need 10 posts and one month's registration.

I'm happy to go ahead and do those 2 rental income returns. Just checking what you need from me.

Thanks
 
You've paid no tax on rental income for the last six years? Unless I'm missing something you're facing a host of penalties, fines and charges for non-payment of taxes, as well as the tax you owe.
Get an account ASAP, I reckon.
 
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