ubiquitous, have you personal knowledge of any non-resident landlords being prosecuted, or having interest imposed?
For 2004, I was tax resident in Ireland, my total income profit (self-employed + rental) within Ireland was under the exemption limit, and my Notice of Assessment for 2004 indicated no tax to pay (other than €253 self-employed PRSI), so no penalties can arise from tax on rent for 2004. Probably no risk of prosecution either, as I was tax resident for 2004.
However, the situation may be different for 2005, if I proceed to declare the rental income through Form 11. For 2005 I was non-resident, and there is tax due. As bazermc suggests, indicating non-resident in my 2005 Form 11 may trigger Revenue to instruct me how the rental income tax should be processed. Whether they will then include this tax in their Notice of Assessment for 2005 anyway, but ask me to process it the correct way for 2006 and later, or whether they will reject my Form 11 and instruct me to process the 2005 rental tax correctly, we can only guess. I suspect the risk of prosecution (or interest) may arise if I don't subsequently follow their instructions (whether for 2005, or later years).
Prior to these discussions, the way I was intending to process rental income tax was at least efficient, and simple, with no additional agent or forms required. But that's my opinion, and I guess only Revenue rules matter. I was seeking to honestly declare rental income. Perhaps Revenue rules are based on the assumption that non-resident landlords cannot be trusted!
From what you both say, it appears the estate agent has no obligation under law to collect the tax. This would explain why they showed no interest in my query. But notice the following extract from IT 70 - A Revenue Guide to Rental Income. Although the Collection Agent can be a family member or other person, this extract suggests that where a property management agency is appointed, it is responsible as Collection Agent:
What if Rents are payable to a non-resident landlord?
Where an agent, resident in the State, is appointed by the non-resident landlord to manage the property and the agent is collecting the rents, the rents must be paid gross to the agent. The agent is then chargeable to tax on the rents as Collection Agent for the landlord and is required to submit an annual tax return and account for the tax due under Self Assessment.
bazermc, you asked if the estate agent receives the rent, or if it is paid direct to me. Every month, the tenant pays the gross rent to the estate agent. The estate agent duducts their fee plus any expenses incurred directly by them during that month (e.g. boiler service), and deposits the difference in my Irish bank account. To calculate my profit, I sum the bank deposits for the year, and deduct any expenses incurred directly by me during the year (e.g. house insurance).
Assuming I have to appoint a Collection Agent (other than the estate agent), other practical and logistical questions arise:
What does 'at source' mean?
(a) Does the agent collect the tax from the tenant, and provide the tenant with a receipt? One advantage of the estate agent is to ensure the tenant pays in full each month. They have experience of doing this, but a relative or friend may not be experienced in reliably collecting tax.
Or (b), can the agent collect the rent from the estate agent, pay the tax, and deposit the remainder in my bank account? If so, should the estate agent not deduct expenses incurred directly by them, but rather invoice me for such expenses?
The property letting agreement (lease) is a legally binding contract. It states the rent amount and requires it to ba paid monthly to the estate agent. How will this contract be reconciled with Revenue rules?
How does the agent submit the tax to Revenue, e.g. letter plus cheque? Or, is there a special form? To whom and where is it submitted?
Should the tax be collected and submitted monthly, or once at end of year?
My thanks to ubiquitous and bazermc for your input so far, and I welcome your further comments.
Have any other landlords reading this had issues similar to mine, and how did you resolve them?
James