Joint Assessment- Rental Income and Pension Contrib

[misstealeaf]

My husband and I are married since 2011 and have not elected to be jointly assessed to tax. I have an apartment which i plan to rent out as we have just bought a house. This was bought before i married him. I will declare this and be liable to tax with the revenue on the rental profits. My husband has no pension in his job so is planning on starting paying into one himself this year.

My question is that if we elect to be jointly assessed to tax will we be able to offset the rental income tax liability against the tax relief on the pension contributions which he pays. He is only 31 so i understand that he will be only liable to receive tax relief on 20% of his salary.

I understand this would be the most tax efficient way for us to manage our affairs but please advise if i am incorrect. I have estimated that my tax liability on the apartment would be c.1700 so if he paid c.4k into a pension and got tax relief on this then we would essentially be getting 4K of a pension for only 2,400 and have no liability on the rental of the apartment. Is this correct?

 

[DB74]

Yeah that's fine

 

[misstealeaf]

Great db74. Thanks for reply. Have a meeting with my tax accountant on fri so will figure out the logistics with him of how to do it what forms I need etc.

 

[misstealeaf]

Sorry I have myself confused. Is there any real benefit in doing what I've outlined above at all?

 

[Sophrosyne]

Generally, joint assessment is the most beneficial method of assessment.

A more definitive answer would require details of your respective incomes, credits and standard rate cut-off points.

 

[Sarenco]

Sorry I have myself confused. Is there any real benefit in doing what I've outlined above at all?

Are you asking whether it is possible to make a pension contribution out of rental profits or whether you would be better off being assessed jointly?

 

[Ash21]

I am very interested in learning more about this topic.

Our situation is very similar only we are older and pay more in tax on the rental. Property is in my name and annual tax is about 4k. We have a cash flow problem servicing this, as we have to top our 'rent account' by circa €600 a month to cover expenditure and this annual tax bill.

We are currently looking at transferring a very small UK pension for my husband he has to and an Irish one. He is the main earner at circa 70k, aged 42 and we are jointly assessed. We were looking at paying €250 per month in the short term, but thinking about it more perhaps we should be putting in the more reading the above.

The reason we were only thinking of putting in €250 is that I am due to go on maternity leave in May. With a second child on the way, would really like to learn more as it may give us more options for me to spend more time in the home. At the moment, cash flow with my rental is the big barrier...