Rental return & stamp duty clawback query

[paul_m]

Myself and my partner moved into a new house we bought in August 2000,
rented it out in 2004 up until August 2005 under the rent a room scheme
where we lived there also.

After August 2005 , we moved to a new property we bought and rented
out the original property. As you know, particpating in the rent a room scheme, means you are not liable for stamp duty clawback.

However, I'm wondering if its legitimate to put down that you
earned 6,400 from the rent a room scheme and 2,400 from normal
rental return in the same tax year (2005) and on the same property.

If so, do you scale back the 7,620Euro allowance for rent a room
scheme since we were not participating in that scheme for the whole
year ?

If you cannot then how would you go about doing a return in such a
circumstance to avoid stamp duty clawback?

I'd greatly appreciate any advise on this since matter.

 

[ClubMan]

If you cannot then how would you go about doing a return in such a
circumstance to avoid stamp duty clawback?

You should not be liable for the SD clawback regardless since you did not rent the property out other than under the owner occupier rent a room scheme within the first 5 years.

 

[paul_m]

Okay, but is it possible to do a return based on the two schemes, (1) Rent a room (2) normal rental return, on the same property within the same tax year?

If so how do you work out the allowances?

P.s. I rang the revenue office, and they said that its not possible to do what I'm trying to do i.e. your rental return is in 1 scheme or the other.

 

[liteweight]

You can do it if you rent a room in your own house and also had an investment property. Just because your investment property used to be your PPR, I don't see why this should make a difference.

 

[Howitzer]

You can do it if you rent a room in your own house and also had an investment property. Just because your investment property used to be your PPR, I don't see why this should make a difference.

That's not what the OP is asking. There is only one property is this scenario.

It's actually a pretty good question since you might assume that, as the OP is suggesting, the 5 year period for stamp clawback et all and the tax year relating to the rent a room allowance are connected. They aren't. You have complied with the 5 year period for the stamp duty clawback and have no liabilities. However you have exceeded the rent a room allowance for 2005 and so have a tax liability on your rental income from that year. This doesn't conflict with you stamp clawback compliance, though intuitively you might think it does.

In retrospect you would have been better off charging less for the final months of 2005 in order to stay under the threshold, though I suspect once you rented the place out full time as an investment property then you actually had no rent a room allowance whatsoever in 2005.

 

[jfitzer]

Very good question. IMO. The leglisation does not specifically categorise part year however it does state the limit for the tax year of assessment which suggest pro-rata may apply, additionally when the amendment to the act came in the amendment stated "for a full tax year" as opposed to year of assessment, however may have possibility to argue this one, based on actual leglisation. However, as the leglisation also specified the lower limit for the short tax year of 2001, the arguement probably would not stand up. If this is the view that the revenue took, which imo they would, on the basis that you only lived in the property till august (8 months) then the limit for Rent a Room would be €5080 and you effectivley would have exceeded this, thus deeming the property investment and subject to stamp duty clawback. It would be a tough case to argue with the revenue .