huge tax bill for renting out for 4 month!!!

P

paddymal

Guest
just wondering if anyone could help,
i bought a flat in early 2007 , moved in with my girlfriend in hers,
so rented it out from september 2007 , so i did my return for 2007 last october. put in all the details etc , wasnt expecting much as i rented for 1000 a month , and the mortgage was 856 , in my unlearned head thinking id only be paying tax on what i made , being 576 , i had a few other expenses , like management fees , which was 592, and insurance , so i really wasnt expecting anything, i got a tax bill for 1800. as i wasnt a member of prtb. i realsie this is completley my fault , i thought telling my mortgage provider to stop the mortgage relief at source was all i had to do. can any on advise me what to do here , i just dont have 1800 to pay. and to be honest if feels incredibly unfair

thanks
 
Paddymal, you pay tax on the difference between the rental income and the mortgage interest after allowable expenses. Was the €856 interest only?

Also I am almost sure the insurance and management fees should be amortised across the 12 months and so the entire amount cannot be put against the rental income. (I am open to correction on this though)

I hate to be the bearer of bad news but if you were exempt from stamp duty on the purchase (First Time Buyer) you are now also liable to stamp duty as you changed the property to an investment property within 2 years of purchasing.
 
i paid stamp duty when i bought , revenue tell me as i wasnt a member of prtb i cant put any of the mortgage against it
 
You are in a bit of a mess there, but try to change that for the year tax returns 2008. You could try to use the rent a room scheme for 2008 which would mean you wouldnt have to register for the landlord thing. It is still your principle private residence, but they have you on record now as letting it out. Best advice is to get an accountant and see if he/she can help you out, or else take the hit and move back in from Jan 2008 to date.
 
Paddy,

Unfortunately they are correct - you must be registered with the PRTB in order to claim for an mortgage interest to be tax deductable....this is the stick they used to ensure all landlords with outstanding mortgages registered with the PRTB.

I know they say that ignorance is no excuse....but it's worth a try. First of all, pay your late fee to PRTB (€140). The fact that you declared all the income in a timely manner AND notified your bank to stop TRS, shows you were not blatently trying to evade tax. Call them up & explain & ask for the fact you were a first time landlord is there any aggreement you can come to. I wouldn't hold my breatht....but it's worth a try.

At least you are aware after just 4 mths tax due.....it would have been worse at the end of a few tax year!!
 
thanks , just seems very unfair , if any one can recomend an accountant that covers that this kind of thing please pm me
 
You could try to use the rent a room scheme for 2008 which would mean you wouldnt have to register for the landlord thing. It is still your principle private residence, but they have you on record now as letting it out. Best advice is to get an accountant and see if he/she can help you out, or else take the hit and move back in from Jan 2008 to date.
Click to expand...

But it is not his PPR so he can't do this retrospectively.
 
If you have the same tenant since the beginning, register that tenancy now and pay your late registration fee of €140. You will technically have complied with the registration requirements and should therefore be entitled to the tax deduction for the mortgage interest.

If the tenant has left but you can contact them to complete the registration retrospectively/late, do the same as above.

If the tenant has left and you can't find them, then Revenue aren't obliged to anything for you, but as noted above, pleading ignorance and seeking concession might be worth a try
 
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