Dealing with revenue,jointly owned house but separated

KrakityJones

Registered User
Messages
13
Hi,

I'm completely lost at how to handle the following situation.

In brief bought a house in 2007 boom with then girlfriend. split with her shortly after.It has been rented on and off since approx 2008, no tax paid. first off can i politely ask not to point out how stupid that was, it was a... surprise breakup (to me) and i just wanted nothing to do with the place afterwards. A huge mistake on my part.

Anyway it's now caught up with me and Revenue want details on all incoming/outgoings on the house for the last few years. Here is my dilemma.

All the rental income etc was handled by my ex. I was aware that the house was rented but had no involvement in it other than to sign my name on the lease as co-owner. All rent was paid into their account. I recently discovered that for a large period of time this rent was not in turn being paid into the mortgage account, leaving it in arrears. (This is a whole other situation I'm dealing with)

My first question therefore is :
Say for example year 1 the mortgage was paid in full - ie the rental income went to the mortgage. I would say therefore that I benefited from it, and so would be liable for tax on the income. Is that correct?
Secondly - say year 2 the mortgage was never paid - ie the rental income didn't go to the bank, didn't go to me, so I would say I did not benefit from it. So would I be right in saying I am not liable for tax on that period of time?

Next question then is in relation to property tax. as I own half the property as such, am I only liable for half the property tax/NPPR? I assume not - that revenue don't care about that, they just want it paid. In normal circumstances I would pay the full amount and get 'my half' back from my ex, but I know I would never see a penny of it.

I guess my question would be : is there any way that I can avoid being stung for the entire amount? Nppr + property tax since 2008 is going to be a pretty hefty bill.

Overall I suppose I'm trying to figure out if I can deal with revenue on just 'my half' of stuff or how does this work - has anyone been in a similar situation? Any opinion/help would be hugely appreciated, thanks
 
Hi

I was in the same situation - first of all you need to backdate the registration of any tenants you had with the PRTB, you can go back for the last 4 years. This means that you can offset approx. 75% of the interest you paid on your mortgage against any outstanding tax owed.

Second, you need to obtain mortgage interest certificates from the bank for the relevant years. If you have any receipts for the furniture when the place was first purchased or for repairs carried out during the time it was rented out then you should submit these also. (D.I.D seem to keep receipts on their system so i was able to get a receipt from them going back to 2008, Harvey Normans were the same - saved me €4k !)

You should really instruct an accountant to deal with the matter on your behalf. I can recommend a guy who was really good and used to work in the Revenue himself. It's not exactly cheap - i think i paid about 1250 inc VAT - but you can offset their fee against any tax owing.

Finally, because I owned 50% as tenant in common, I was only liable for 50%. My accountant basically told the Revenue to collect the rest off my ex.

The NPPR will hopefully not be an issue - i was never contacted about it by the Council. The property tax on the other hand i'm not too sure about as i paid that myself anyway. The other thing you might be liable for is mortgage interest relief - chances are your ex was receiving this when the property was being rented out. This should have stopped once you moved out. The revenue never once mentioned this to me and i never said it to them either. I havent received a bill from them in relation to this but chances are they will eventually come across it and send you out a bill if you have any liability with them.
 
Hi,


My first question therefore is :
Say for example year 1 the mortgage was paid in full - ie the rental income went to the mortgage. I would say therefore that I benefited from it, and so would be liable for tax on the income. Is that correct?
Secondly - say year 2 the mortgage was never paid - ie the rental income didn't go to the bank, didn't go to me, so I would say I did not benefit from it. So would I be right in saying I am not liable for tax on that period of time?

Sorry i forgot to add - just to answer your other question - as far as i am aware, it does not matter if the rent was paid off the mortgage or not as you will still be liable for your share. That was my understanding of it anyway.
 
Hi

Thanks for the reply. For the most part the tenants were registered with prtb, It was never changed for the last guys living there though as far as I know so I better check that. Problem for me is I (very stupidly) let my ex handle all of that side of things so it's going to be fun trying to dig out all that info.

Have very few receipts (again I didn't really have much to do with the place) but I never knew places like that would hang onto receipts, more digging to do I guess.

I am really hoping that it will be a case of me just being liable for 50% of it. I guess this is beyond me sorting out myself, time for an accountant I guess.

Much as it kills me to deal with her I wonder if I'm better off just getting all this put in jointly - this is what she is proposing to do (she has to do the same with revenue) but this is an extremely untrustworthy person so would much rather look after my own affairs separately.
 
You definitely need an accountant. You should probably consult your ex about getting the same accountant to handle it. Maybe you could use her accountant?

How much interest was paid on the mortgage? You will be allowed set 75% of that against the rental income, so there might not be a very big tax liability.

The bigger issue is what is happening to the house and mortgage now? You need to sort that out.
 
The NPPR will hopefully not be an issue - i was never contacted about it by the Council. .

Hi moolah, it's a huge issue for you and for Krakity.

And it is getting bigger with every passing month. You need to talk to your accountant about this as well and pay it or you will have huge penalties.

Brendan
 
It might be worth your while to put it in jointly. What's the worse that she can do in that case? Either way the accountant has to assess the liability so if further down the line she decides not to co-operate then you can just continue with your side of the assessment. You shouldn't be liable for more than your share of the property - the revenue didn't raise any issues with my accountant when he said it to them.
 
Hi moolah, it's a huge issue for you and for Krakity.

And it is getting bigger with every passing month. You need to talk to your accountant about this as well and pay it or you will have huge penalties.

Brendan

Hi Brendan

I've been declared bankrupt since so thankfully I don't need to worry about it !

NM
 
Hi Again,

I may have to grit my teeth and talk to her then again so. Personally I'd be happier just sorting my own side out but i have to think of the best financial outcome. I had hoped that the fact I didn't benefit at all from the bulk of the rental income (it was paid to her, and she did whatever she did with it, I never saw a penny) would go in my favour. If that was the case then I would not work with her on it as i would be effectively saying I got rental income also, which I didn't for most of the time.

Regarding figures..it's bad. Rental income would have been around 30K over the last 4 years, with TRS also paid on it so all in all around 35K. Interest paid out was 20K. So I'm potentially on the hook for I don't know maybe 20K ish.

As for the house itself Brendan the bank have agreed to a voluntary surrender of the property (they wouldn't agree to us selling it) and I'll have to enter some form of insolvency agreement to deal with the shortfall afterwards. My fear is that she will declare bankruptcy and I get left owing a fortune, it'll be bye bye home, family and country at that point I fear.
 
I thought my liability was in or around that figure too Krakity but it only worked out being €1500 for my share. Talk to an accountant and put your mind at ease.
 
Hi, thanks for the reassurance Moolah. I've since gotten a very good accountant on the case so all looking promising, the hardest thing with this is just getting it started once you start to move it moves pretty quick. Don't know what the damage will be yet but at least it's being sorted I guess.

Brendan my details are as below :

Income details
Net monthly (i.e. after tax):2336 - Employee of a company
Income history: Have been lucky enough not to be out of work in years
Net monthly income partner/spouse: Not married
Income history:
Amount of child benefit received : No kids
Amount of Mortgage Interest Supplement received : N/A

Personal circumstances so we can calculate your reasonable living expenses
The Insolvency Service has published Guidelines for Reasonable Living Expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be.
One adult family or two adult family : One adult family
Do you need a car for work or do you use public transport? Need a car for work (as part of the job)
Number of children 0- 2 years old: No Kids
Montly spend on special circumstances: e.g. exceptional healthcare costs : N/A



Home loan
Lender: Ulster Bank
Amount outstanding: 308,000
Value of home: 140000 as estimated from daft.ie
Interest rate: specify whether tracker or SVR or fixed rate : Tracker - (.75 above ecb)
Monthly repayment : 970
Amount in arrears: 27,000

Summary of discussions and agreements with the bank : Complicated but in brief mortgage payments were set to come out of ex's bank account, she stopped the direct debit about 2 years ago and for the most part paid in nothing. She had also changed the correspondance address on the mortgage account without my consent (not my signature on the change of address forms either, got a copy from the bank) so I was unaware there was a problem. Found out by chance when enquiring about something else that the arrears were there. Bank told me they were beginning reposession proceedings. Argued that I knew nothing of any issue and could we do something to repair things. didn't get anywhere with them (response was that it had gone too far so choice was either they take the house or we surrender it). Got new beginnings involved to help, working with them on voluntary surrender at present, will deal with the outstanding amount afterwards.


Credit Union
Amount of shares : 2500 approx
Amount of loan outstanding : 8000 approx
Monthly repayment : 500
Term left : Approx 1.5 years


Other loans and creditors - delete those which don't apply to you
None

Other savings and investments
None

Do you expect any lump sums in the medium term future?
Redundancy, inheritances, injuries awards.
No

How important is retaining the family home to you?
Which of the following best describes your situation?

I am not interested in retaining the house, it's not a home, it's a reminder and a constant tie to a painful time


Any other relevant information

What is your preferred realistic outcome?
I have moved on and started a new life with a new girlfriend etc. The house is in a completely unsuitable place for my work and it has too much of a history for me to every live in it again. I just want to be able to start again. Preferred outcome would be to let the bank have it, and come to some compromise on the outstanding debt.
 
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