Forced landlord, not doing what I should be

JohnMc

Registered User
Messages
34
Hi all

I am hoping to get some guidance on what I should do. I bought my house in 2007 (recently involved in tracker redress which is beneficial). A change of career to a less well paying career with less prospects in 2011 resulted in me making the decision to emigrate to the UK for work purposes in 2013.

Since late 2013 I've rented this property and it has been rented since. I have no intention of going back to the house and I plan to hold it till it is paid off in 23 years or so.

I was still in receipt of mortgage interest relief (after I emigrated to the UK) and I got a letter to the mortgaged address from the revenue saying as I've moved out it was no longer my principal private residence and I need to pay back that money, approx €5k.

I also have not registered as a landlord. I have never made any profit from the property and it costs me money to maintain. Only in the last 3 month due to tracker redress it is being profitable.

My question is as follows:
Will the revenue come after someone like me who was in negative equity, was forced to emigrate and making a loss on this property? If yes, the tax bill would be high (which I have not accounted for one bit)
Should I register as a landlord?
Any other advice would be great that someone thinks would be useful.

Thanks
 

cremeegg

Frequent Poster
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2,798
I was still in receipt of mortgage interest relief (after I emigrated to the UK) and I got a letter to the mortgaged address from the revenue saying as I've moved out it was no longer my principal private residence and I need to pay back that money, approx €5k.
This isn't going away by itself.

The Revenue is unlikely to proactively chase you to the UK, but they could put a charge on the house.

If you have never made any profit from the property then there may be no tax payable.
 

JohnMc

Registered User
Messages
34
Thank you cremeegg. Yes that is my feeling too and I now feel better about dealing with it considering recent tracker redress benefit.

I've seen this website in another thread and it is quite informative mcgibney.ie/2012/12/24/irish-property-living-abroad-what-to-do-about-tax/

When you say a charge, does that mean if I try to sell it they could take a portion of the sale value to cover what they owe?

Cheers
 

llgon

Frequent Poster
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376
The fact that you were in negative equity and forced to emigrate will make no difference to Revenue.

Are you sure you were making a loss? You cannot include any capital repayment in your costs and in recent years a lot of the interest paid is not allowable as a cost either. Unless you have been renting it for a very small amount I would expect that it has been profitable, at least as far as Revenue are concerned.
 

JohnMc

Registered User
Messages
34
Thanks IIgon

I can check my bank statements to confirm but I am pretty sure in 2013 I rented it for 900 and my mortgage was 1300. I put the rent up to 1000 when the environment changed (probably a lot later than I should have as my tenants were good people). Approx 18 months ago I put it up to 1100 which is still cheap. I changed terms with my bank and got monthly payments down to 1150 approx 18 months ago.
Yes, maybe revenue if they do not allow all interest will have their own workings. I think by the sounds of it and from what cremeegg said it is not going away and I better address it soon rather than let the problem grow.

Thanks.
 

mugsymugsy

Frequent Poster
Messages
67
As tough as it is you either bury your head in the sand and it will eventually catch up at a later date or you can look to sort it out sooner. Either way is not going to be fun but hopefully things will improve
 

cliqueentour

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Messages
57
Not wanting to scare you but you are in trouble and need to sort this immediately. Its only going to get worse.

You haven't registered as a landlord, first mistake. This means you cannot wrote off any costs against income.

Secondly, you continued to claim mortgage interest relief even though u didn't live there. Some people would call that fraud. That revenue are only looking for this money to be repaid and not adding interest and penalties, my advice would be to pay this back asap.

Thirdly, u think u made a loss and aren't liable for tax. You are wrong. Your repayments might have been 1300 and rent 900 but the repayments included capital element to them. So your interest repayment was say 400 a month. U are up 500 a mo th so approximately 250 a month due in tax. That's 3k a year for 5 years plus interest and charges.

Like I said, I don't wanna scare you, but revenue aren't going to drop this. Get professional advice immediately or engage with revenue and put a payment plan in place. None of us like.paying tax but pay revenue and keep them happy would be sound advice.

You can have the benefit of doubt and say you are niave as opposed to tax dodging.
 

Protocol

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2,889
Thanks IIgon

I can check my bank statements to confirm but I am pretty sure in 2013 I rented it for 900 and my mortgage was 1300. I put the rent up to 1000 when the environment changed (probably a lot later than I should have as my tenants were good people). Approx 18 months ago I put it up to 1100 which is still cheap. I changed terms with my bank and got monthly payments down to 1150 approx 18 months ago.
Yes, maybe revenue if they do not allow all interest will have their own workings. I think by the sounds of it and from what cremeegg said it is not going away and I better address it soon rather than let the problem grow.
Bear in mind that it's mortgage interest that is deducted to calculate the profit.
 

Sarenco

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5,432
To add to your woes, I’m afraid the mortgage interest payments (never mind the principal repayments) are not deductible for tax purposes if you haven’t registered with the RTB.

I think you should try and gather as much relevant documentation as possible on your rental income and costs (bank statements, etc.) and make an appointment to see a good accountant.

The situation may not be as bad as you fear and Revenue can be fairly reasonable if you approach them with your hands up.

Best of luck.
 

JohnMc

Registered User
Messages
34
Thanks all. I will do this. My friend is an accountant and he is going to talk to me this weekend.
cliqueentour: the mortgage is a 35 year so a lot of the payments I was making was interest. I take your point this is not possible to write off if I am not registered. I will try to sort it out. Thanks for the help.
 

Bronte

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13,305
Some incorrect information.

You can back register with the RTB.

Means interest is deductable at 75%.

Either way, all costs are deductible.

Can you do a year by year rental income and expenditure please.
 

Sarenco

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5,432
@Bronte

I don’t think anybody said it wasn’t possible to register with the RTB for earlier periods.

The amount of interest that is deductible once the relevant tenancy or tenancies is/are registered with the RTB depends on the year in question. For example, you can deduct 80% of interest payments to calculate your rental profit for 2017, 85% for 2018 and it will be possible to deduct 100% from 2019 onwards.

A good accountant will sort through this in jig time.
 

JohnMc

Registered User
Messages
34
Thanks Bronte and Sarenco. An interesting nights sleep but good to hear this news this morning. I will register with RTB and get it sorted.

I can do a year by year rental and expenditure. I have all my mortgage statements so I know how much interest I paid. I have a very good idea of rent and when it was increased and I've got expenses like a management fee which I hope can go against any tax payable. I also have some repair costs painting etc, no receipts of course. I will try get on this in the next day or so. Have a good day.
 

Brendan Burgess

Founder
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37,694
Since late 2013 I've rented this property and it has been rented since
Sorry, for giving you something else to worry about, but you do need to sort it out.

There was a charge called the NPPR tax which finished in 2013.

https://www.nppr.ie/default.aspx

While it was only €200 , you would now owe €750 including penalties for late payment.

You might well get Revenue to waive it if you rented the property very late in 2013. But you do need to address it because when you sell your house, you will need a certificate to say it was paid or exempt. So get it sorted as well.

Brendan
 

Bronte

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13,305
@Bronte

I don’t think anybody said it wasn’t possible to register with the RTB for earlier periods.

The amount of interest that is deductible once the relevant tenancy or tenancies is/are registered with the RTB depends on the year in question. For example, you can deduct 80% of interest payments to calculate your rental profit for 2017, 85% for 2018 and it will be possible to deduct 100% from 2019 onwards.

A good accountant will sort through this in jig time.
I agree that he needs a good accountant. But he can help himself by going into all his records and outlining them on here so we can see if he missed anything. The mortgage interest is useless to him as it is only for 2017 which is now, but it's no good for 2013 - 2016. But the good news is he will have wear and tear. That might be high.
 

renter45

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Messages
104
I agree that he needs a good accountant. But he can help himself by going into all his records and outlining them on here so we can see if he missed anything. The mortgage interest is useless to him as it is only for 2017 which is now, but it's no good for 2013 - 2016. But the good news is he will have wear and tear. That might be high.
Does that have to be backed up with receipts? (assume carpets, wooden floors. blinds etc..)
 

JohnMc

Registered User
Messages
34
Hi all, thanks for responses. I will get it sorted, its a priority. I think I'm going to work through it myself first and try make sense of it and then call in some professional advice, hopefully in the shape of my friend who might be able to help. The below calculation is for 2013 when it was rented out in October. Am I on the right lines here? Am I reading right from what Bronte said that I can't claim a deduction on my mortgage interest for 2013-2016, I hope I am reading that wrong. I can't seem to add an excel attachment.

Rental Income Allowable as deduction Total (tax payable)
Oct-13 900.00
Nov-13 900.00
Dec-13 900.00
2,700.00
Mortgage Interest
Oct-13 979.11 734.33
Nov-13 977.72 733.29
Dec-13 976.33 732.25
2,199.87
Other expenses
Oct-13 Painting 600.00 600.00
Nov-13
Dec-13 Maintenance charge 225.00 225.00
Oct-Dec Mortgage life insurance 66 66 66.66
Tax to be paid - 390.87
 
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JohnMc

Registered User
Messages
34
Sorry that is not saving the way I was hoping.
In summary:

Rental income in 2013 = 2700
Deduction:
Interest -2199.87
Other exps
Paint -600
Maintenance charge - 225
Life insurance -66.66
Tax to be paid -390.87
 
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