Help - Some Questions on Form 12

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Laura

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I am in the middle of completing a Form 12 retrospectively for the years 2001, 2002, 2003, 2004, 2005. I have some questions that I need clarification on :

1. When calculating expenses for a rental property - can I include travel expenses to and from the property for the purpose of addressing tenants issues (eg broken shower, leak in ceiling etc ?). If I can does anyone know what mileage rate would apply for the years 2001, 2002, 2003, 2004, 2005

2. I understand that Wear & Tear is a deductable expense from Rental Income. My initial furniture and fittings expenditure was ~10,000euro. Looking on Revenue website I think I can apply 20% per year over 5 years - so I am deducing that for 2001 my wear & tear expense would be 2,000 (this seems high to me - Am I on the right track ?)

3. Also for the mortage on the rental property buying a Life Assurance policy was mandated as would be expected - Can I apply this as a deductable expense from my rental income for 2001 ?

All very specific questions but would really appreciate if anyone could help. I've called Revenue on this but got varying answers so came away more confused than before the call.
 
You really are taking a big risk if you have six years tax returns outstanding and you are now attempting to prepare these without a comprehensive understanding of everything involved. You would be well advised to seek professional advice from an accountant or tax advisor before proceeding.
 
Thanks for the reply - I have already discussed this with an accountant and gotton advise from various other people including speaking with people in revenue and they suggested completing the forms myself
 
You are also trying to deal with tax as it applied several years ago so some of the Revenue publications will be too modern for the rates / rules applicable to you.

Honestly, i dont think it would cost that much to get professional advice from a tax advisor on the calculation of the tax for each year in a straightforward case... however, late tax returns and late payment of tax due (if any) is another matter.
 
1. You can include travel expenses as part of the management fee (this will cover all incidental expenses like travel etc). Mgt fee must be realistic though, upto you what you decide to include. If your 'unlucky' enough to get a revenue audit, they will ask you to justify. Chances of Audit are higher due to late returns.

2. You should claim 12.5% over 8 years.

3. You can claim life assurance as an expense. Life assurance on an investment property is not obligatory, only on your PPR.

Good luck with it. You will most likely be charged interest as they are late returns, fine is possible also.
 
Thanks Dad & Extopia for your responses.

As I am currently working on 2001 at that time the Wear&Tear rule was 20%per year for 5 years - Should I use the Wear&Tear calculation that was "active" at that time or does the 12.5% over 8 years supersede that now that that is the live rule ?

I understand I will encounter penalties & fines for my late returns and am prepared for this. My goal is to get my situation regularised and go from there - whatever that requires fine\penalty wise
 
dad said:
You can include travel expenses as part of the management fee (this will cover all incidental expenses like travel etc). Mgt fee must be realistic though, upto you what you decide to include. If your 'unlucky' enough to get a revenue audit, they will ask you to justify.
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Opinions differ as to whether travel expenses are deductible. Revenue have indicated in the past their view that these are not deductible, and exclude motor expenses from the list of allowable expenses that they specify in IT70. Returns including a modest deduction under this heading may well be accepted by Revenue without adjustment but in a Revenue Audit scenario, my own belief is that a taxpayer would have very little comeback if an Inspector unilaterally decides to disallow a motor expenses deduction and look for interest and penalties on any resulting underpayment.
 
Laura said:
As I am currently working on 2001 at that time the Wear&Tear rule was 20%per year for 5 years - Should I use the Wear&Tear calculation that was "active" at that time or does the 12.5% over 8 years supersede that now that that is the live rule ?

I understand I will encounter penalties & fines for my late returns and am prepared for this. My goal is to get my situation regularised and go from there - whatever that requires fine\penalty wise
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Again if you don't mind me saying so, I think that you're crazy to be doing this unless you fully understand all the issues. If you were just completing a current return fair enough, you pays your money and you takes your chances, but where 6 years arrears are involved, someone in the Revenue will have to intensively review your returns for all years if they contain errors. There is a risk in this scenario that the combination of late filing and eventual underpayment could trigger an audit or even prosecution proceedings.

This risk will be minimised if you ensure 100% that your returns are correct before filing. Engaging a professional to do this will also mean that they will be able to advise you how to minimise the risk of fines and interest and also handle any subsequent queries, thus minimising the risk of unpleasant consequences.
 
I agree re the Travel Expenses. When I checked with Revenue they were unclear. The journey to the property is a round trip of about 200 miles. I plan to calculate the travel expenses not on a mile rate rather the cost of the petrol for this trips. I think this would be more acceptable
 
ubiquitous said:
Again if you don't mind me saying so, I think that you're crazy to be doing this unless you fully understand all the issues. If you were just completing a current return fair enough, you pays your money and you takes your chances, but where 6 years arrears are involved, someone in the Revenue will have to intensively review your returns for all years if they contain errors. There is a risk in this scenario that the combination of late filing and eventual underpayment could trigger an audit or even prosecution proceedings.

This risk will be minimised if you ensure 100% that your returns are correct before filing. Engaging a professional to do this will also mean that they will be able to advise you how to minimise the risk of fines and interest and also handle any subsequent queries, thus minimising the risk of unpleasant consequences.
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You have me worried now. I have spoken with a professional on it and having reviewed my records etc they have said my liability small. I have full documentation and backup on all the calculations I am providing so I believe I should be in a good position if there were any subsequent queries arising from my returns
 
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