Rental Income Tax

J

JimmyBond

Guest
My wife and I have a second house that we let at the start of January 09. The house is in both our names. I am a PAYE and my wife works only part-time with relatively low income (~8K/year).

For tax payable on the rental income can somebody tell me the following:

1. When do I need to do a tax return on income earned during calendar year 2009?
2. Do I makereturn it on Form 12?
3. To whom is the income assigned - the reason I ask is if I was able to assign the income to her then we would have very little tax to pay due to her available tax credits?
4. Can you claim tax relief for wear and tear to carpets & furniture even if they were purchased prior to the first letting?

Can someone please give me some straightforward answers to these questions?
 
JimmyBond said:
My wife and I have a second house that we let at the start of January 09. The house is in both our names. I am a PAYE and my wife works only part-time with relatively low income (~8K/year).

For tax payable on the rental income can somebody tell me the following:

1. When do I need to do a tax return on income earned during calendar year 2009?

Before Oct 31st 2010.

2. Do I make return it on Form 12?

YES.

3. To whom is the income assigned - the reason I ask is if I was able to assign the income to her then we would have very little tax to pay due to her available tax credits?

Hmmm, I assume you take her basic tax credit, and if she earns just 8k per year, then the €1830 PAYE tax credit would cover that.

Ye may have some unused 20% tax band??

4. Can you claim tax relief for wear and tear to carpets & furniture even if they were purchased prior to the first letting?

I did a search on www.revenue.ie for you. I searched for "rental income" and found this:

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

Can someone please give me some straightforward answers to these questions?
Click to expand...
 
If the house is in both your names then the letting should be in both names.

You may file on F12 but ONLY if the net income is below €3,800 ( I think, correct me on this someone ) pa. Income in excess of that must go via Form 11.

If realistic current values are placed on Fixtures/fittings/equipment at commencement of letting then that may be claimed at 12.5% pa.

If there is mortgage interest then this is only allowable in 2009 at 75% of the amount paid and then only if all lettings are properly registered with the PRTB.

Remember also to register with NPPR for the €200 tax.
 
There is a bit of a loophole here actually.

The legislation states that a "chargeable person" is obliged to file a tax return (for want of a better phrase).

The legislation then defines a chargeable person as someone who earns > the €3,172 above.

There is actually no mechanism whereby someone with income < €3,172 HAS to file a return, nor is there a mechanism whereby they can be charged interest or penalties or surcharge for late submission as, again, the legislation only refers to chargeable persons when the penalities etc are mentioned!

PS - I have successfully argued this with Revenue as recently as last year and they removed the late surcharge from a client's IT return on foot of a letter.
 
[broken link removed]

Based on the above tax briefing re chargeable person, my understanding was that it was only if the net non-PAYE income was less than €3,174 and the income was coded on tax credit cert of the individual that the individual was not a chargeable person. Therefore if not coded on a tax credit certa return would be required.

The reason I was looking at the tax briefing was that I was trying to determine when a Form 12 would be filed rather than a form 11. Based on my reading this would only be in the above situation i.e. net non PAYE income of less than €3,174 that is not coded on tax credit cert.

The tax briefing clearly states that gross non PAYE income of greater than €50k, or less than €50k with net income greater than €3,174 both file form 11. If gross non PAYE income less than €50k, net income less than €3,174 and coded to tax credit cert the individual is not chargeable. Therefore it is only in that one situation that a form 12 would be required. Agreed?
 
Thanks for that Brendan - seems I (& the tax consultant used AND the Revenue dept who removed the surcharge) were all wrong!
 
Thanks for all the information. So based on a rental income of circa €8,000 I need to file form 11 by Oct 31st 2010. Is that correct
 
JimmyBond said:
Thanks for all the information. So based on a rental income of circa €8,000 I need to file form 11 by Oct 31st 2010. Is that correct
Click to expand...

Yes. Remember tho' that Income Tax for 2009 payable by 31/10/10 (being your first year) and Preliminary Tax for 2010 itself due by 31/10/10 also so a double whammy then.
 
That sounds very unfair...I may as well give Revenue the full rental income. Whats the logic to the double whammy?
 
You must log in or register to reply here.
Back
Top