rent a room tax

ronaldo1 said:
However can I jump back to my 2004 situation. I started renting out my appt in July (6mts for 04) and recieved €5160 in rent - this is under the rent a room limit by €2460. Can I now in theory back date a rental increase for 04 to maximise my RaRS limit i.e €7620. Hence I don't know my tennants as much overall. I would owe them €1350 for 05 and they owe me €1230 for 04. Balance I owe them is €120ea. Is this possible. ANain I ran this by Revenue and the "advise" I got would be that this is ok. All that would appear on my return for 04 is €7620 and the same for 05. Should I ask revenue for this in writing or get an accountants or tax advisors advice.
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This looks a rocky road to go down. Your return for 04 is overdue. It should have been made last October and if it had been made then you would have placed a value of E5160 on your 04 rental income. There isn't a credit associated with the rent a room scheme that you can carry forward.

A lot of the time the advice you get from Revenue will be the advice you want to get off them. This can come about through asking leading questions whereby you have, deliberately or not, left out relevant details. Or the person on the other end may simply not be qualified enough to give you the right answer. You could be talking to a 18 year straight out of doing the Leaving cert when you should be spending a few quid on getting a qualified professional to give you the correct answer, not the answer you want to hear.
 
Howitzer said:
This looks a rocky road to go.
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Thats putting it mildly!
I think that has to be the worst "advice" I've ever seen from Revenue! They are suggesting you commit tax evasion!

Why not back date the rent to 2003 and then you can write some of it off your liability for next year? It's basically the same thing.

Revenue seem to allow late returns on RaRS (previous thread on rent relief when paying parents) but now to say you can backdate to use up unused thresholds is simply wrong (and illegal). It may never get caught (you probably would get away with it as proving the exact figures recieved would be difficult) but that really shouldn't mean that a member of Revenue staff should suggest it's ok.

Not sure how you may be able to get any of that in writing.
 
ronaldo1 said:
.............i'm now clear that I can write a cheque for €2700 (€1350 each to my two tennants) giving back rent for 05 to bring me under the rent a room limit of €7620 and hence have no tax liability only to declare the €7620 on my tax return. I will also keep the cheque as proof that I've paid it if revenue ask for it or carried out an audit or even if the tennants applied for rent relief.
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This, too, appears to be a crazy idea. Effectively what you are doing is throwing €2700 to your tenants and leaving yourself as a sitting duck to be hammered by Revenue as a tax defaulter if they ever audit you or otherwise come looking for you. Copies of cheques paid out to tenants will hardly wash with Revenue. They are usually suspicious of "creative" transactions and they would not be slow to disallow any such "artificial" transaction designed to avoid tax. You would be lucky to escape a comprehensive audit of all your finances if you are found trying to mess them around like this. You could easily end up being prosecuted.
 
It's becoming increasingly obvious that Revenue customer service staff need more training. I know we shouldn't look to them for financial advice but information on their own service is a different matter. If I rang any service provider for information I'd expect them to know their business inside out.
 
liteweight said:
It's becoming increasingly obvious that Revenue customer service staff need more training. I know we shouldn't look to them for financial advice but information on their own service is a different matter. If I rang any service provider for information I'd expect them to know their business inside out.
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Problem is that our tax system is based on extensive, complicated and often subtle legislation. For example, the copy of the Direct Tax Acts sitting on my desk runs to some 2,560 pages. One particular Capital Gains Tax textbook which I use regularly runs to some 1,200 pages. Another textbook solely dealing with income tax runs to 2,283 pages. You will not cover much of that material in a standard employee training course.

It is impossible for the Revenue to provide meaningful telephone support to the public on all except the most basic of tax issues. Only the most experienced experts will be familiar with all aspects. It would be an absolute waste of scarce expertise to have the best & brightest in the Revenue answering the phones.
 
ubiquitous said:
It is impossible for the Revenue to provide meaningful telephone support to the public on all except the most basic of tax issues.
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Unfortunately, from experience, in some cases they don't even manage that. But I agree with you on the general gist of your post.
 
Again, fully agree with the post ubiquitous, but couldn't the Revenue staff give an answer like this when asked questions they aren't 100% sure of (so yes, every question).
 
For 05 my tax liability is €10320 x 42% = €4334.4
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Are you sure this is correct. You can make a number of deductions from the rental income to arrive at a profit on rental income. The main one being interest paid on the mortgage (not sure how much you can deduct if you are also living in it.)
You have to be registered with the PRTB in order to claim Mortgage Interest Relief. This only came into effect recently so it may not apply to renral income in 2005
See [broken link removed] especially
What expenses can be claimed?
What expenses can be claimed for Wear and Tear?
What if a premises is only partly let?
Example rent account
 
I agree ubiquitous, that not all staff can be fully conversant with all tax matters. However, when I ring, I'm usually transferred to someone which gives me the impression that I'm being put on to someone who knows. What's Joe Bloggs supposed to do. It's too expensive to run to a tax consultant with every little thing, not all accountants agree on tax matters and, in any event , tax matters are our own affair so Joe Bloggs can't blame the accountant. I'm sure a lot of genuine mistakes are being made out there but unfortunately that's no excuse either so Joe Bloggs often ends up paying penalties.

Can't Revenue ensure that staff are trained in their particular area? Obviously if someone rings with a complicated question, staff should suggest they visit a consultant. However, a simple question like will I have to pay clawback if I go over the RARS allowance, should surely have been dealt with umpteen times before and the answer emailed down through the ranks.
 
I agree. However, I'm not convinced that extra training for staff is going to solve the problem, as you suggested above - not when the legislation alone runs to over 2,500 pages. In that context I don't think its reasonable to expect the Revenue staff to know the tax code, or even specific areas, inside out. It would take years to train someone to expert level on CGT for example.

It would probably be better for everyone concerned if Revenue refused point blank to deal with queries from the public and simply referred callers to publications on their website. Whether this would be politically acceptable is open to question.
 
ubiquitous said:
It would probably be better for everyone concerned if Revenue refused point blank to deal with queries from the public and simply referred callers to publications on their website. Whether this would be politically acceptable is open to question.
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I think this would go down like a lead balloon! After all, if staff in Revenue can't explain their publications, how can we expect the general public to understand?
 
Re Ronaldo's queries

2005 - I don't think you should write that cheque. You had an agreement for rent evidenced by the monthly payments and I don't see any reason why Revenue should accept a payment back to the tenants as a reduction in your rental income. If they audit your return in 3 years time and raise an assessment for the tax due who is to say that you'll be able to get the money back from the tenants.

2004 - Echo comments made by ubiquitous, crazy suggestion.
 
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