Non resident with apartment rented on airbnb

Hi, I'm an Irish citizen currently living and working abroad so I'm non resident. I own an apartment in Dublin and for the past several years I've had it rented out to long term tenants, but recently I've started doing short term lets using airbnb.com. The lettings can very from a weekend to a full week. I have always declared the rental income (from the long term rental) as part of my overall tax return each year. However the Revenue has instructed airbnb to deduct a blanket 20% of the amount they pay for each letting to non-residents i.e. from the payout that airbnb sends me.

I'm wondering does this have a negative effect on my overall tax. In previous years I declared the rental income and was able to deduct related expenses like new white goods, maintenance, advertising fees, etc. Now it seems like we lose out on this due to the blanket 20% deduction at source. I really don't see why the revenue need to get involved in this - the payments are going into my Irish bank account so the lodgments will be there for all to see when I do my tax return.

So am I losing out when this 20% is deducted from my airbnb payments? I assume as I've already paid this 20% at source that I don't need to declare the apartment when doing my annual tax return in future?

Tia

Your tenants should have been deducting 20% withholding tax all along!

It's a withholding tax and can be avoided if you appoint an Irish agent.

You or your agent still have to make a tax return but you will get credit for the tax withheld.

Joe_90 said:

Your tenants should have been deducting 20% withholding tax all along!

Click to expand...

Hmm wasn't aware of that nor did my accountant mention it when doing my annual tax returns.

Joe_90 said:

It's a withholding tax and can be avoided if you appoint an Irish agent.

Click to expand...

Do you mean a letting agent to manage it for me? These guys charge a fortune so no chance.

Joe_90 said:

You or your agent still have to make a tax return but you will get credit for the tax withheld.

Click to expand...

Ok good to know.

This blog post should give you some pointers on what to do:

http://mcgibney.ie/2013/03/14/non-resident-landlord-how-to-appoint-tax-collection-agent/

SomeRandomer said:

Hmm wasn't aware of that nor did my accountant mention it when doing my annual tax returns.



Do you mean a letting agent to manage it for me? These guys charge a fortune so no chance.



.

Click to expand...

Joe 90 is correct in that the 20% deduction is the law for non resident landlords. Your accountant may not have mentioned it as in practice not all non residents have their tenant's deducting 20%.

You have come under revenue radar because of this particular letting site it seems to me. Which revenue seem to be targeting.

In my own case either my rents are lodged into my account or put there by my relations who work for me in collecting the rent etc, so far revenue have never said anything about the 20% to me.

You don't need a letting agent, you can appoint a family member if this will get you around the problem.

Just curious, is the return better on short term lets? by much? Is it not a lot more hassle?

Bronte said:

Joe 90 is correct in that the 20% deduction is the law for non resident landlords. Your accountant may not have mentioned it as in practice not all non residents have their tenant's deducting 20%.

You have come under revenue radar because of this particular letting site it seems to me. Which revenue seem to be targeting.

In my own case either my rents are lodged into my account or put there by my relations who work for me in collecting the rent etc, so far revenue have never said anything about the 20% to me.

You don't need a letting agent, you can appoint a family member if this will get you around the problem.

Just curious, is the return better on short term lets? by much? Is it not a lot more hassle?

Click to expand...

Quick points - the 20% is not a deduction. It should be deemed to be an advance payment or a withholding tax - it is not lost, you will get credit of your ultimate bill.
One cannot avoid it by having relatives collect it - this is playing fast/loose with the system; although if there is no ultimate shortfall, then I wouldn't expect any difficulties (interest/penalties) arising.

This 20% is designed to ensure that Revenue collects tax from non-residents from whom it could otherwise be difficult to chase down.

Kildavin said:

One cannot avoid it by having relatives collect it - this is playing fast/loose with the system;

Click to expand...

It is not. The Revenue guidelines clearly state that the 20% deduction doesn't apply once a Collection Agent is nominated. There is no requirement for the Collection Agent to be a professional or other letting agent. The entire point of the Collection Agent system is that there is then an Irish-resident person whom Revenue can chase for unfiled returns or unpaid liabilities. (How this all tallies with EU equality law is beyond me, btw).

T McGibney said:

It is not. The Revenue guidelines clearly state that the 20% deduction doesn't apply once a Collection Agent is nominated. There is no requirement for the Collection Agent to be a professional or other letting agent. The entire point of the Collection Agent system is that there is then an Irish-resident person whom Revenue can chase for unfiled returns or unpaid liabilities. (How this all tallies with EU equality law is beyond me, btw).

Click to expand...

I should have been more precise - I only meant that you couldn't avoid it by having persons not-registered with the Revenue collecting it on your behalf, that is to say, the Revenue want to ensure they have someone known to go to in the State.

Kildavin said:

I should have been more precise - I only meant that you couldn't avoid it by having persons not-registered with the Revenue collecting it on your behalf, that is to say, the Revenue want to ensure they have someone known to go to in the State.

Click to expand...

But you can! If you want to register a friend, relative or other amateur "collection agent" to act in this capacity, you can do so quite simply by using the same registration form that is used to register a professional "collection agent".

Kildavin said:

Quick points - the 20% is not a deduction. It should be deemed to be an advance payment or a withholding tax - it is not lost, you will get credit of your ultimate bill.
.

Click to expand...

Yes this is correct, but you'd be rightly goosed if the tenant was holding onto 20% of rent.

Just for the record, the state doesn't know about my agents, it is I who is registered for tax etc. So far this is working fine. If I'm forced to change what I do I will, but no tenant will ever be able to deduct 20%.

Also in relation to my relatives, since they've been doing this for so many years for me, they are I consider more professional than some of the chancers I've met in the rental letting business.

T McGibney said:

The entire point of the Collection Agent system is that there is then an Irish-resident person whom Revenue can chase for unfiled returns or unpaid liabilities.

Click to expand...

I find it difficult to understand how a collection agent could ultimately be liable for my unfiled returns or taxes, it doesn't make sense to me. In any case, despite my not being in the country, the property is there so they could go after that.

Bronte said:

I find it difficult to understand how a collection agent could ultimately be liable for my unfiled returns or taxes, it doesn't make sense to me.

Click to expand...

Because that's the commitment they sign up for.

Bronte said:

If I'm forced to change what I do I will, but no tenant will ever be able to deduct 20%.

Click to expand...

If revenue instructed your tenants to make the mandatory deduction, what could you do but accept it?

T McGibney said:

Because that's the commitment they sign up for.

Click to expand...

As an aside, what if the tenants deduct the 20% and do a runner?

markpb said:

If revenue instructed your tenants to make the mandatory deduction, what could you do but accept it?

Click to expand...

Let them start that, I have more than one tenant you know. Revenue have better things to be doing than wasting their time on landlords like me who declares her rent, does tax returns and pays taxes, including the NPPR etc.

Bronte said:

Let them start that, I have more than one tenant you know. Revenue have better things to be doing than wasting their time on landlords like me who declares her rent, does tax returns and pays taxes, including the NPPR etc.

Click to expand...

From the landlord's viewpoint, Revenue ain't the problem here. The problem is the difficult tenant who insists that they must deduct 20% from the gross rents payable to the landlord, and who then heads to the bookies with the deduction proceeds. Registering a collection agent is a basic and uncomplicated protection against that possibility.