Big mess with no rental income tax paid

hilaryrob

Registered User
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I am writing here on this forum because I want to sort my tax and financials out asap, and want to try and understand the tax system better.

My husband and I fell on very hard times back in 2008/9 and lost our jobs after that our main focus was to try and save the family home, and appease the banks. Back and forth stress and more stress. He finally left in 2010 and went back to Australia and I doubt I will see him again as we separated. He is uncontactable. Anyway, sorry, a long story here, but just to say that I ended up very stressed, sick and had a breakdown and went and stayed with relatives for a while and then house-sat a friends apartment on and off for 18 months. In that time, when he left, to get some money in my husband had gotten his letting-agent friend to rent the house out. That money goes to the mortgage and bills and I dont touch it. Its a joint account but he doesnt use it or access it anymore.

But its only in the past few months now that I have been well enough to look at our financial mess and start sorting it out. Red letters and threats from the bank because our payments are too low and we missed a couple of months. And all sorts of other stuff.

Anyway, so we havent paid tax on this rental income and I must do something about it. I havent a clue where to start as my husband usually did the financials. When I was house-sitting I was doing it in Scotland, so effectively an overseas landlord really, but I never changed my address or anything because my sister held my post for me. But I told the bank recently (when writing about my efforts to pay the mortgage - ie that I am living free so we can get some cash in with rent ec) and its likely now on my bank records that its been rented out. Also, the main evidence is from the bank statements which show money deposited by the agent.

I know I should really talk to a tax accountant about this really but I wanted to ask here on this forum whether there is confidentiality in me getting advice? If I reveal this all to someone and lay all my cards on the table, arent they legally bound to report me? I do not know who to trust.

Also, Im sure there is going to be hell to pay and I know that ignorance is no plea, so please I hope I can get some feedback here without a scolding.

Questions:

1- Do I declare that I was overseas, and sort this out as an overseas landlord ,even though no bills, job, or lease to show new domicile? - even though I was getting no wage or on a lease etc abroad? I may move to London soon for a fresh new start, but currently back in Ireland since Christmas

2- How bad are the penalties going to be? Is there an amnesty if I am willing to pay it all back now plus penalties? I have very little money but will redirect this rent back to revenue instead of the bank.

3- What is the next step?

Thank you for any helpful advice on this matter
 
First off don't worry.

When did you start getting rent? What other income did you gave in each year to 31 December? The major issue you will have is that you have not registered the tenants with the PRTB. To claim 75% of the interest you should be registered with the PTRB.

Are the same tenants still in the property? A late registration may be possible.

So get the rent and interest and other income together and there may be no liability. You get a personal credit of €1,650 so that means that income below €8,250 is not taxed so no major issues.
 
Ah Joe thanks so much. I am still very worried of course but Im taking it one step at a time.

No, I there have been different tenants in and out, and it was rented from mid 2010 onwards. There are some people in there now. I dont deal much with letting agent as he just takes his cut and fixes things as he goes. He is not with a company and works on his own. Once, around 2 years ago he asked me for my number (PAYE number, what is it called now?) and I wonder did he register me? I seem to remember he needed to give it to the tenants.

What happens if I didnt register with the PTRB? Is there a penalty? And if I register now will I be able to back-claim?

I was not earning much in that time maybe 600-800 a month, and since I haven't paid my own rent and lived for free since then, I was able to live off it as Ive been frugal.

The property has had problems which is why tenants have moved on, and I think a few months every year have been empty and also, expenses. I was earning well before we rented it out but after we rented it, I stopped working fulltime.

I had been told last year sometime that it doesnt matter if I dont make any profit or extra cash every month, I must still do a return and declare it all. And make some sort of statement no matter what. But I just couldnt face it back then so didnt bother, but it has stayed with me.

So this income of 8250 is all my 700aproxpm x 12 plus the rent 950 x 10months approx= approx 17k. So I dont mind having to pay 17k minus the 8250 = 11k

But can I back pay for 2.5 years?

I started to read another thread which said something about overseas landlords not getting their agents to collect tax and that folk can be prosecuted and I realised that my situation is much more serious since I havent paid for a few years.
 
Ok check with the letting agent if they registered you with the PTRB?

If they did then you will get a deduction for the interest so no tax may be payable. Was your income from PAYE employment? If so you will get the PAYE cr and may not have tax liability.

Remember that you are only subject to tax on 50% of the rent your ex is liable to tax on 50%.
 
Not sure if this would be of any use to you but the Citizens Information service in certain parts of the country run free clinics with a group called CAVA, they are accountants who give advice to help people who cannot afford to pay an accountant. It is mostly self employed people they help but your predicament sounds like it should be something they would deal with too. If you are near a Citizens Information office maybe enquire if they have a CAVA clinic.
 
I think you should hire an accountant. They will not disclose anything to revenue. They will tell you what you can do and how much you probably owe. You might be lucky. Particularly if your agent registered you with the PRTB. Also this all started only in 2010 and probably not a full year of rent.

I think that it would ease your mind to talk to a professional.

Is your mortgage fully paid?
 
Sorry to hear about your unfortunate predicament Hilaryrob, and I am sure that good luck is around the corner. If you are going to declare rental income to the taxman, you can write down the fixed assets that are in use by the tenants over 8 years e.g. if you have a sofa that was bought for the tenants and it cost say €800, you could deduct €100 a year for 8 years as a capital loss. You are also entitled to write down repairs to the property. Would be useful if you kept receipts for all of this ? If you are registered with the PRTB, between using 75% of the mortgage interest, fixed asset write down and expenses that you paid out of your own pocket for the property, you may not owe them that much really. Try not to worry
 
Thank you to everyone for helpful and hopeful comments. I am feeling a little bit better. Yes, my husband did furnish it for tenants and so there is a lot of stuff in there, and some of it is quite damaged by now. I spoke to the letting agent today and he did not register at PRTB. He is quite disorganised and works alone. I wonder is it too late by now to register and what advantages there would be. He would have kept receipts for work done, I think. But he is quite disorganised. But I know he had to replace a washing machine once, and I remember work done to fix bad damp and replace bad carpets. So there has been money spent. He used the rent for this. It looks like I will need to do is get the bank to give me all the old statements so I can see what went in and out. But I might not be able to find all the paperwork or furniture receipts as my husband would have had a lot of that and done most of it.

I am going to look at speaking to these CAVA accountants. I was so sure that what I said was not going to be confidential but Im relieved. This is going to be easier to talk about face to face. Thanks again everyone.
 
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