are tenants liable for non-resident landlords tax?

J

Janeom

Guest
hi,

my husband and I are currently renting and are moving to a new property at the end of the month. We wish to claim tax back on the rent we have paid for the past 12 months and went to the revenues home page to download the appropiate form.

However I now see that we were supposed to deduct the tax on the rent when we paid it (as our landlord is currently living in England) and if not, that we are liable for the tax that is not paid.

here's what it says.....
"If you are a PAYE employee and are paying rent to a landlord living outside Ireland, you account for the tax you deduct by applying for a tax credit and completing Form Rent 1 (see how to apply). If you pay tax by self-assessment, you account for the tax you deduct in your notice of self-assessment which you send to Revenue. Failing to deduct tax from rent you pay to a landlord living outside Ireland will mean that you (and not the landlord) will be liable for any tax which should have been deducted"

I certainly have no intention of being liable for paying his tax and should n't we have been informed about this on taking up the lease as he has rented this property for the past 10 years ? We don't deal with the landlord directly but the builder (who by the way is a complete w***** and totally unapproachable) who built the apartment complex manages it for him.

I don't want to evade tax but I don't want to pay our landlords tax either.....
We paid him €750 per month so I guess we should have been paying him only €500 and the revenue €150. If we have to back pay his tax that will effectively mean our rent was~ €900 per month.

What do any non-resident landlords out there do ?

Regards,
Janeom
 
janeom - unfortunately, the rules and regulations are there for a reason, and that reason is to ensure that tax due by the landlord is paid. The Revenue know that the chances of them pursuing someone outside the country are pretty slim, so they make the tenant liable for the collection 'in advance'

I'm not sure how the Revenue expect people to know the residency status of their landlord.

I'm not sure what will happen now, but I presume the Revenue will hold you liable as that's what it says in the Act. It may be possible to argue that you were dealing with the (resident) builder/manager, but this would presumably depend on whatever agreements you signed and who else signed them, and also possibly on who you actually paid the rent to.

Sorry I don't have any particularly good news on this front.

z
 
re

Thanks for that Zag.
We pay the rent into the landlords Irish bank account but the manager told us he was living in England. However we have never once spoken to the landlord and we signed the lease agreement with the manager. THe ESB bill is in the landlords name though...

I still think the manager has some onus to inform us of our liability before we start paying the rent (we just moved back to Ireland so have n't encountered this before).

We asked the manager about reclaming our tax back when we moved in he said " that we could as everything was above board". I think we need to speak to the landlord as hopefully he is declaring the rent to the Irish tax authorities.

Otherwise I think we will forget about reclaiming our tax as renting that property was not worth €900/month as otherwise we are just drawing attention to the situtation.
I know its evading tax but we feel ripped off enough having paid good money for a grotty/run down apartment (another story) but will not pay the landlords tax. It all seems very strange that the onus is on the tenant. We can't afford to buy a house with the high prices at the moment and yet we are potentially liable for our landlords tax....it all seems very unfair.

Janeom
 
Re: re

It really would be disgraceful if you were faced with paying the landlord's tax bill in this scenario.
 
Re: re

A few years ago, the Revenue lost a court case after they had tried to force a tenant to pay tax on rents paid to a non-resident landlord. They subsequently changed their procedures so as to ensure that each non-resident landlord must now appoint someone (resident in this country) to be responsible for rent collection and tax payments on their behalf. This effectively means that the rules regarding tenants deducting tax are now largely superflous. Contact the Ombudsman's Office if you need any assistance on this.
 
Re: re

If you signed a lease agreement with the manager, then I would presume it is *his* residency status that is the issue.

I don't think the Revenue expect tenants to wade through several levels of ownership to establish who truly owns the property - if you signed an agreement with the Irish resident manager, then that makes him your landlord.

This would also tie in with his claim that all is above board with regard to claiming the tax relief, so it may not be as bleak as it first appeared.

z
 
re

Thanks for that....the situtation seems somewhat rosier. The revenue should clarify the situtation on their web page as its somewhat misleading.
I'll post back here if we ever get our tax back.

Janeom
 
Re: re

The manager is not the landlord.

However it sounds like he is the landlords agent. If this is the case, there was no requirement for you to withhold any tax from rent payments and thus you have no liability.

I haven't got a rent 1 form to hand - but there should be a line for entering the landlords agents details in cases such as this.

This will enable to you make the appropriate claim and get €508 refund.

Good luck
 
re

yes there is a space for filling in the agents name and address but only it seems if the rent is paid to him.
However unfortunatley we did n't pay the rent to him...we paid it into the landlords Irish bank account.
However I think I will still put down the agents name on the form (and maybe note on it that we did n't pay the rent to him) as he is the person we have been dealing with all the time.

Janeom
 
Re: re

Yes but by supplying the agents name etc, Revenue know that it is/was not your responsibility to withhold the tax.

Thus, as I said everything will work out and there is nothing to worry about. You can quote me on that.

HS
 
Path of least resistance

I agree with all of the above comments. I would however express my doubt that the property manager is the landlord's tax agent.

I am aware of the case taken to the Obundsman concerning the Revenue looking for the income tax not withheld on the rent paid to the foreing landlord.

My advice would not be to claim the rent allowance as you may be opening a large can of worms. As the rent credit is much lower than the potential tax not withheld the risk may nt be worth it. I also would consider that to fight the Revenue looking for the "easy" money would be time consuming.
 
best way to do it?

I'm a virgin to house-letting, now have a couple of prospective tenants wanting my 3-bed house in West Dublin at Euro900 month. I've learned much from AAM so am trying to set things up properly, have a signed tenancy agreement, deposit, references etc. They currently live on mainland Europe so offered me guarantor's and bank details instead of references, which I accepted.

One of the couple is "self-employed"; the other a post-doctoral student moving to Ireland to pursue research.

I opened an Irish Nationwide current a/c into which rent could be deposited by direct debit each month, and bills, charges etc. paid out as needed.

As I am non-resident, how do I communicate this info about the "tax" and what exactly do they need to do (they don't know RoI system!) Should I download these forms and give them to the tenants in advance, or what?
 
Re: best way to do it?

Hi Marie

They don't have to do anything once you follow recommended Revenue procedures and nominate a "collection agent" who will be responsible for ensuring that you pay 20% tax at source over to the Revenue.

See

Also, do get professional advice on this, unless you have the stomach for dealing with the Revenue yourself. This sort of thing works seamlessly if you are fullly informed but can get messy if errors are made.
 
tax on non-resident's income from houselet

Tommy - I couldn't get the links from the "key post" as they seem to have been deleted but your own webpage was most helpful.

So is this it! My "Collection Agent" (next-door neighbour would do it for a few bob!) needs to be the named account holder for the bank or building society a/c into which rental income is deposited. She would then - every month when the Euro 900 deposits, draw a cheque for £180 to the Inland Revenue. At the beginning of each financial year I have an Accountant such as yourself prepare accounts. Your fee can be added to the list of allowances, all of which are deducted from the gross rental income before the 20% tax is assessed. If for example I spent Euro 5,000 on refurbishing the bathroom in the first year, 12.5% of this also goes onto the list of allowable expenses.

Is this pretty much it.....apart from pitfalls like rapid turnover of tenants, rise in mortgage interest-rates etc?

This seems like such a huge investiture of effort for what amounts to income covering HALF my monthly mortgage repayment, and a lot of risk and hassle. I'm beginning to understand why Brendan Burgess elsewhere advocates stock-market investment as preferable to property-investment!
 
update

Just an update to my first post. We are dealing with the agent now and its proving troublesome to get the landlords PPS number or address. I am beginning to think the agent lied when he said everything "was above board" as he is making comments like " the rent was reduced by €50 a month to compensate for this".

The agent is saying that the landlord has no PPS number as he does all his busisness in the UK but surely thats not the case? He is Irish and has a bank account with BOI here.

I rang the revenu but they were no help...just told me I was liable for the non-paid tax and that was it. I at least want to report him...just wonder can I report him (anonymously) with just his name and bank account (+ I have the address of the agent) ?

Janeom
 
Reporting the landlord

You can report him anonymously, but you won't get any real joy with it.

I had a similar situation with a landlord a couple of year back who wouldn’t give his PRSI / PPS number, or home address in Ireland, and we reported him to the Revenue, but the guy on the phone said that there was little chance of them pursuing him. He said the Revenue have bigger fish to fry (in his words) than just an amateur landlord.

Net result: we got stiffed on the rent relief, and he probably never paid any tax on it.
 
hassle

These stories are appalling! How can the Revenue "turn a blind eye" when ignoring corruption at the interpersonal level gives the go-ahead for more widespread corruption and fraud! I'm really struggling with a revised picture of Ireland and seriously wanting to sell up/pull out, though I love my country very much. It is hard to reconcile these stories of people screwing each other financially, with the (relatively!) friendly, ethical Dublin of my earlier years. This throws light on the off-hand attitude of prospective tenants (one e-mailed that though the deposit was Euro 900 he was 'offering' me 300 till he got more funds!!!!) none of whom I would feel safe to turn my back on. I've also had difficulty with trying to get bona-fide tradespeople to do renovation. The fashion seems to be that everyone is working 'off the books'........which means no protection for me on the standard, and no records of money spent on refurbishment. Have I been living in Pollyanna-land or something! Is this the current Irish version of 'business'? If so it's completely unviable. :\
 
Re: hassle

Net result: we got stiffed on the rent relief, and he probably never paid any tax on it.
Click to expand...
Hi John - Just to clarify, are you saying that you were refused rent relief because you couldn't produce the landlord's PPS number?
 
hassle

Can this be true? Where's ethics, where's 'the' law in this. Really sounds like the pioneering settler days in USA complete with highwaymen, rustlers and lynchmobs. You - surely? - can't be just "stuck" with someone else's tax evasion!
 
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