End of rental income - 2018 Preliminary Tax query

H

HarryPD

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I am a bit confused as to what to do with the 2018 Preliminary tax payment on the 2017 return. I have been renting an apartment since 2011, tax up to date and now in the process of completing return for 2017 income (am PAYE and this is the only source of additional income)However, the tenancy ended end in August 2018 and the apartment is about to go on the market (accidental landlord - delighted to be finally escaping the whole thing). Clearly my tax liability for 2018, if any when I factor in management fees, €2000 plumbing repairs etc., will be a lot lower than 2017 and nowhere close to 90% as required under the Preliminary tax part of the return.

Does anyone know how Revenue view the final year of rental income for preliminary tax purposes? Any advice/suggestions welcome.
 
Thanks for your reply Gordon Gekko, however it is also the one I feared as I will be paying a lot of tax on income I will never receive. Can I expect an actual refund after submitting the 2018 return next year or a "credit" against future rental income tax liabilities (of which there will be none)??
 
If you feel your income will be under 5k for 2018 then why not fill in the form and tell them to de-register you for form 11. Then fill in form 12 next year.

Note: I am not a tax expert or an accountant so there may be a good reason not to do this.
 
Why will you be paying a lot of tax on income you won't receive? - it's 90% of your expected income in 2018 not 2017
 
Ok, guess that's the nub of my issue. It has always seemed to me that the 90% payment was based on the previous year's final return (i.e. for 2018 it would be 90% of the 2017 return). However, if it is 90% of the 2018 "expected" income (which in this case is final as I am in receipt of no more), that is far more manageable.

I have submitted the rental tax return on Form 12 every year (never Form 11 - being PAYE I presumed this is what I was expected to do). The income itself would be 8 months of rent - €11000 but that will be greatly reduced by way of the usual reliefs, a hefty repair bill, medical expenses, management fees etc. Suffice to say, I am very much looking forward to relieving myself of all the fun of being a Landlord.
 
To avoid interest charges, you must pay an amount of preliminary tax that is at least one of the following:

  • 90% of the tax due for that year
  • 100% of the tax due for the preceding year
  • 105% of the tax due for the pre-preceding year (this option only applies where you pay by direct debit - it does not apply if the tax due for the pre-preceding year was nil).
Click to expand...

If you use option 1 and underestimate the tax due you may be liable for interest charges and/or penalties
 
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Cheers JPD. I had always read "90% of the tax due for that year" to be the tax due for the year of the final assessment (as in this instance, 2017) but reading it again, "that year" seems to be the year for which the prelim tax is being paid and does not seem to be tied into the 2017 return. I'm already feeling a bit better. Thanks again.
 
HarryPD said:
"that year" seems to be the year for which the prelim tax is being paid
Click to expand...
It is.
and does not seem to be tied into the 2017 return.
Click to expand...
Its not.
I'm already feeling a bit better.
Click to expand...
:)
jpd said:
If you use option 1 and underestimate the tax due you may be liable for interest charges and/or penalties
Click to expand...

Interest but not penalties.
If the income is small, as Harry expects, the interest on any incidental shortfall is likely to be commensurately small.
 
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