rental tax liability

F

Frank

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I rented my house 2 years ago now.

3 bed I was living in for 3 years so all fully furnished.

I did register with the PRTB.

I never sorted out taxes, as the third year is coming around I think I need to get this sorted.

Would this need an accountant or can I just pick up forms to sort it out?

Any advice appreciated.
 
Frank,
I'm renting out a house I bought as new and lived in for a couple of years and here's a few pointers on all things tax - as I understand - and I'm open to correction. I've done this myself (with a little guidance from the revenue website, and talking to revenue agents on the phone - they can be quite helpful)

1. Stamp Duty clawback - if you didn't pay stamp duty when buying (e.g. first time buyer) and rent out property within a 5 year period of deed. This sadly is the full amount that you would have paid if you were exempt from stamp duty when purchasing. This is the form - [broken link removed]- I'm sure there's an explanation somewhere on the revenue site too as to how to fill this (I know there was when I did, I just can't seem to find it now).

2. Rental Income. I submit a tax return for rental income for the previous year. I'm paye so the form I was told to use by a revenue agent is the form12 http://www.revenue.ie/en/tax/it/forms/form12.pdf (there's no online equivalent of this at the moment) - this covers all sorts of returns, only the rental income section was really relevant to me. In calculating the tax on the rental income there are deducation you make e.g. interest on mortgage (not capital though), management fees, agent fees, insurance fees etc. (http://www.revenue.ie/en/tax/it/leaflets/it70.html) The last two years I've made a loss, so havn't paid any tax - but still make the tax return. I've only done 2007 and 2008 to this point, so I'm not sure how the new income levies come into it. Does anyone else know?

3. CGT. Once the poperty is no longer your PPR you will pay CGT when you sell it. I've not had to do this yet (haven't sold yet) but as the property was your PPR at the start there is a reduction. When deciding whether to sell or rent the property (really seeing where my break even point was) this was a factor - selling the house right away meant that - I wouldn't have paid stampduty, I wouldn't be paying CGT in the future - the price would have been better than selling now! Hinsight's great! I do intend to hold onto the place for 15-20 years, so fingers crossed it works out ok in the long run. The agent in revenue was helpful at explaining the CGT consideration in detail.

Hope this helps,
Matt
 
Matt very informative feel more like I will give it a go myself.

Thanks for the other info as well.

I will print out the form12 and ring revenue and see where I go from there.

How about being late on the first year whats the chances of an extra charge for being late?

Do I need to submit reciepts or just hold them for a certain number of years?
 
I know if you're late paying the stamp duty clawback (if this is appropriate) there're some pretty steep interest charges - details are on that clawback form. Not sure about being late for the tax return.

To do the return you don't need receipts - you just enter the figures - you'll only need to produce receipts if they choose to do an audit on your submission. So far I haven't, but I've kept all the receipts anyway.

M
 
If you owe tax and it's late you pay interest and possibly fines and penalties as well. You must keep documentation for 6 years but it's advisable to keep it forever. If you don't understand all the things you can claim against rental income you should get an accountant to set you right, this fee can allso be offset against the tax due.
 
House was bought 2nd Oct 2003 for 179000

Rented 12th May 2007 so only in for about 3.5 of the 5 years.

I think an accountant may be an idea for the first go anyway.

Thanks for all the advice.
 
Speak to a tax consultant.

You should make an unprompted Qualifying Disclosure ("QD") to Revenue. The tax due and interest charges cannot be avoided. However, by making a QD there should be mitigation in respect of penalties, publication (of your name) and prosecution.
 
I spoke to my accountant about 14 months ago on this matter. Turn out that in the Dec 07 budget they change the claw back to 3 years.
 
LLDLY said:
Even better
Click to expand...

Sorry to be bearer of bad news but the 2-year clawback only applies in respect of rentals occurring after 5 Dec 2007. If you rented the place out before that date and also before the (old 5-year) stamp duty clawback period, then the SD clawback is repayable in full.
 
Calculating Commercial Rent - Any Ideas how to calculate amount of rent one should charge on a premises with income of 100k.pa
Is it a % of Income plus rent on premises (how to calculate ?)

Would appreciate any replies
 
Am I corect in saying that the stamp duty clawback only applies if you rent the house out within 2 years of purchase and before Dec 07??
 
In claiming relief against the rental income, is that 12.5% of the purchase price over 8 years. For example, cost = €242,000, 12.5% = €30,250, over 8 years = €3,781.25. Is this correct? Is this an automatic relief you can claim or do you have to show receipts of purchases?
 

Are you talking about a section 23 property or something like that?

If not, then you can't normally claim the purchase price of a property against rental income - only 75% of the mortgage interest (for mortgage on that property) plus allowable expenses.
 
airgead07 said:
refering to post by Girlf on 25 april last.
Click to expand...

That reference relates to furniture/contents only. It's 12.5% per year (so 8 years = 100%). So, you buy a new sofa for the tenants on day 1, you can claim €100 per year of that cost against rental income. Doesn't apply to purchase price of the property.
 
Been a long week, brain not working tonight, was thinking that would be a bit generous.Thanks again
 
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