No "Case V" deduction for NPPR and the Household Charge.

mandelbrot said:
97(2)(d) - the cost of maintenance, repairs, insurance and management of the premises... being an expense of the transaction(s) under which the rents were received (this catches most of the "normal" expenses - but since the NPPR / HC don't arise as expenses of renting, they don't fall in here, and a deduction under this subsection would require a concession similar to that for term life assurance).
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I mentioned in a previous thread that buildings insurance costs 'don't arise as expenses of renting'. You can rent an uninsured property and a property can be insured regardless of whether it is occupied. Yet insurance is clearly an allowable expense for Case V. I don't remember anyone ever waiting for a Revenue eBrief or Tax Briefing 'concession' on this point.
 
T McGibney said:
I mentioned in a previous thread that buildings insurance costs 'don't arise as expenses of renting'. You can rent an uninsured property and a property can be insured regardless of whether it is occupied. Yet insurance is clearly an allowable expense for Case V. I don't remember a Revenue eBrief or Tax Briefing telling me so.
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Well then there's a new angle to argue for a deduction! Or, conversely, maybe no-one is entitled to a deduction for insurance! (I knew you'd had something else up your sleeve the last time this area was debated! :) )

But I don't see how it changes the position regarding the NPPR / HC. One could say that Revenue custom and practice in allowing insurance, confers an implicit concession. Whereas nothing of the like exists (yet) for the NPPR / HC...
 
Or it could be said perhaps that NPPR/HC falls within the ambit of the following:
(d) the cost of maintenance, repairs, insurance and management of the premises borne by the person chargeable and relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received, not being an expense of a capital nature;
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?
 
mandelbrot said:
One could say that Revenue custom and practice in allowing insurance, confers an implicit concession.
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That would be a very dangerous road for them to go down. Under self-assessment, people could be claiming under the radar for all sorts of garbage, and any 'custom and practice' precedent could end up being trotted out for 'Dvd rentals', 'wages to children' and the like.
 
T McGibney said:
Or it could be said perhaps that NPPR/HC falls within the ambit of the following:
(d) the cost of maintenance, repairs, insurance and management of the premises borne by the person chargeable and relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received, not being an expense of a capital nature;
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?
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You could say it but that doesn't make it so!

Returning to the issue of the deduction for insurance:
If I have a property let and I have it insured, I could argue I only have it insured because it is let, as it is more likely to burn down or be damaged etc with tenants in it...

Or maybe there is a concession, and it's just not known about because it was made so long ago.

Or maybe nobody's ever stopped and thought about it, to realise that while there's no strict legislative basis for it, there is a de facto operative concession.

In the case of any of the above I don't see there being anything to help justify a deduction for the NPPR / HC. And going back to what Gekko and Callybags said above though, if the legislators intent was for there to be a tax deduction I don't think there'd be such uncertainty TBH. (But having said that, we wouldn't be all enjoying ourselves arguing like we are without the uncertainty! :D )
 
T McGibney said:
That would be a very dangerous road for them to go down. Under self-assessment, people could be claiming under the radar for all sorts of garbage, and any 'custom and practice' precedent could end up being trotted out for 'Dvd rentals', 'wages to children' and the like.
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Well that's very different. Countless people have been audited, and produced amongst their records, the insurance receipt, as well as their rental accounts with the insurance deduction on it.

Those other nonsense items are routinely disallowed when discovered.
 
mandelbrot said:
Returning to the issue of the deduction for insurance:
If I have a property let and I have it insured, I could argue I only have it insured because it is let, as it is more likely to burn down or be damaged etc with tenants in it...
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Its actually harder and more expensive to insure a property when it is unoccupied.
 
callybegs/gekkos argue that if the govnt thought it would be tax-deductible they'd have raised the amount in order to collect the planned revenue.
two ripostes:-
A) Raising tax by a certain percent does not mean that the actual revenue collected is equal to that increase. People cheat and hide their income. People can't afford it and go broke and pay nothing. Indeed, sometimes a lowering of charges can result in an overall increase in revenue collected.
B) As in point A, many people can't afford the increases in a certain charge ,whatever that charge may be . They cease trading or letting OR whatever. Making a NPPR/property taxes too high may mean many landlords throwing in the towel. Therefore the overall "cost" of too steep an increase may be greater than the actual increase.

So I don't accept that the govnt deliberately intended this to be non-deductible otherwise they would have made NPPR and property charges much higher.
 
I, too, suspect that the 'intention at government level' basis for interpreting legislation is irrelevant here.

The day he introduced the Public Service Pension Levy, the late Brian Lenihan claimed it would yield €x million for the exchequer that year. Almost immediately, his figures were disputed and it quickly became clear that Lenihan and the government had forgotten that the Pension Levy would be deductible against tax, so the projected saving would accordingly be somewhere between 20-41% lower than initially expected.

Revenue in that case could have argued that the Pension Levy should not be tax-deductible because the government had intended initially that it wouldn't be so. I don't think their case would have held up.
 
Actually I wonder if the govnt thought about the deductibility aspect either way.

In any case when I return to ireland I shall do my self assessment and state clearly that i'm deducting nppr and proeprty charges. My tax-expert representative at the ensuing Appeals thing shall be TMcGibney who'll do it for nothing , if that is possible for a Cavanman
 
I have lost count of the number of threads on this subject both here and on other forums,the fact remains that Revenue have not stated whether this is allowable or not is frankly disgraceful and I don't care how busy they are,there should be no grey areas or second guessing in regards issues like this.
 
Knuttell said:
I have lost count of the number of threads on this subject both here and on other forums,the fact remains that Revenue have not stated whether this is allowable or not is frankly disgraceful and I don't care how busy they are,there should be no grey areas or second guessing in regards issues like this.
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Without excusing the fact that no briefing has issued, I would imagine it's possible that Revenue don't see any grey area. They may be of the opinion that these charges clearly aren't rates, aren't levied by local authorities, and aren't expenses of a transaction giving rise to the receipt of rent, and that therefore there is no grey area. And iin the absence of any substantial level of lobbying / representations to them to suggest that taxpayers / agents are second guessing, then they may not see a pressing need to issue a clarification.
 
mandelbrot said:
Without excusing the fact that no briefing has issued, I would imagine it's possible that Revenue don't see any grey area. They may be of the opinion that these charges clearly aren't rates, aren't levied by local authorities, and aren't expenses of a transaction giving rise to the receipt of rent, and that therefore there is no grey area. And iin the absence of any substantial level of lobbying / representations to them to suggest that taxpayers / agents are second guessing, then they may not see a pressing need to issue a clarification.
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Why on earth don't they publish their view though? They see no problem with horsing out eBriefs on all sorts of obscure topics, almost on a daily basis. The fact that the ITI have engaged on correspondence with them on this topic should have signalled long before now to even the most elevated ivory-tower bureaucrat that this is a matter of public concern.
 
T McGibney said:
Why on earth don't they publish their view though? They see no problem with horsing out eBriefs on all sorts of obscure topics, almost on a daily basis. The fact that the ITI have engaged on correspondence with them on this topic should have signalled long before now to even the most elevated ivory-tower bureaucrat that this is a matter of public concern.
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And I go back to the original thread on this and my viewpoint that revenue don't want to give a written decision as they are unsure of the law. Knuttel is quite right, revenue should tell us, after all it is their job to do so instead of sending waffly letters. I note in this regard that this thread is very popular, and I presume a lot of landlords are reading it (and revenue)

Unlike oldnick I haven't put it in my tax return as my accountant has advised me not to. Oldnick did you put in an expression of doubt about it the first time you submitted or did you just fill out the tax return and leave it at that?
 
It looks as though Revenue have updated the IT70:

http://www.revenue.ie/en/tax/it/leaflets/it70.html#section7

What Expenditure Cannot Be Deducted?


The following are examples of expenditure you may not deduct when computing your rental income or losses:
  • Pre-letting expenses, i.e. expenses incurred prior to the date on which the premises was first let apart from auctioneer’s letting fees, advertising fees and legal expenses incurred on first lettings,
  • Expenditure incurred between lettings in certain circumstances,
  • Interest in the period following the purchase of the property up to the time a tenant enters into a lease and after the final letting,
  • Post-letting expenses, i.e. expenses incurred after the final letting,
  • Capital expenditure incurred on additions, alterations or improvements to the premises unless allowable under an incentive scheme or incurred on fixtures and fittings,
  • Expenses incurred in the letting of premises on an uneconomic basis,
  • Expenses incurred on lettings that are exempt under the Rent-a-Room provisions,
  • The charge on residential property (sometimes referred to as the second home charge) introduced by the Local Government (Charges) Act 2009.
 
So, by specifically mentioning only the second home charge (nppr) and not the property charge, (which has been introduced months ago- and which will eventually cost far more than the NPPR), does that mean the latter is deductible ?
Or is it another two years of lack of official advice ?

Strange that the IT70 has been updated in the last few days .Which Revenue official is reading AAM !
 
I've never seen a client claiming a deduction for the NPPR charge.

Every accountant I know is aware of Revenue's position (i.e. that the charge is not deductible). I've never seen a return where the charge has been claimed as a deduction. If a client insisted on claiming a deduction for the charge, their return's cover letter would have to be caveated appropriately.

Any AAM contributor with an interest in this topic knows the position and knows of the Institute's discussions with Revenue and Revenue's position as advanced during those discussions.

A year ago, if you Googled "NPPR+deductible+Revenue", top of the list were AAM threads like this and a link to the ITI's Q&A on the subject where Revenue's position is clearly stated.

I find it odd that contributors have been claiming a deduction for the charge when they've been well aware of the position. The "until I see an eBrief" argument doesn't cut the mustard in my view.

When the Big 4, the ITI, Revenue and every tax consultant on AAM have been advising people that the charge is not deductible, it's a bit rich to have to listen to posters still claiming that the position isn't clear.

Will these taxpayers now make a qualifying disclosure or technical adjustment in relation to any underpayments of tax which have arisen?
 
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