When to pay tax on rental income?

[HMC]

I have just rented out my property as of August. My question is do I file a tax return in 2012 or 2011? I found the guide to filling in the return on the Revenue's website but couldn't find the actual form itself. Can anyone guide me to it please?

Many thanks
HMC

 

[Jo1708]

The tax return for 2011 isn't due until end of October next year. Saying that, if it is likely that there will be a tax liability for 2011, you will need to pay preliminary tax on that this year. This is 90% of the liability and is due by 31st October 2011.

 

[RMCF]

The tax return for 2011 isn't due until end of October next year. Saying that, if it is likely that there will be a tax liability for 2011, you will need to pay preliminary tax on that this year. This is 90% of the liability and is due by 31st October 2011.

I have been renting out a property this year for the 1st time, and just assumed that I had to start chatting to an accountant sometime next summer in preparation for my Oct 2012 tax return.

Should I see one soon? Don't know anything about preliminary tax liability.

 

[mandelbrot]

I have been renting out a property this year for the 1st time, and just assumed that I had to start chatting to an accountant sometime next summer in preparation for my Oct 2012 tax return.

Should I see one soon? Don't know anything about preliminary tax liability.

Because you only commenced letting property this yea, (and I'm assuming that you never previously had to file a Form 11), then your options for preliminary tax in Oct 2011 are either, 1) Pay 90% of the current year liability, or 2) 100% of the prior year (i.e. 2010) liability.

As you weren't a chargeable person (Form 11 filer) in 2010, then 100% of Nothing is Nothing...

That is all well and good but if you roll on 12 months towards October 2012, you will be hit for a double whammy, owing all of 2011's liability on or before 31/10/2012, along with the preliminary tax for 2012 (which by the same rules as above, will be either 100% of 2011's bill, or an estimate of 90% of 2012's).

So the conventional wisdom is to pay in preliminary tax as much as you can, based on your best estimate of what you might owe, to avoid a cashflow problem when Oct 2012 comes...

 

[RMCF]

I see now, thanks for that info. I might look into paying some this year to lessen the blow.

 

[portstorm]

If i started renting out my property in Nov. 2010 can I only deduct 1/6 (2 months Nov./Dec.) of:
Interest paid in 2010 (well 75%), mortgage protection, home insurance etc. from the 2 months rental income for 2010?

thank u

 

[mandelbrot]

Correct, anything prior to that would be pre-letting expenses and not allowable. See IT70 on the Revenue website...