Tax liability will be a negative will I just leave funds on account until next year?

[Paul O Mahoney]

Hi, all just thought I'd ask a question on something that has never happened before and would appreciate your views. I have just finished the 2020 return and calculated the 2021 preliminary tax .

We have changed a few things, one was having one of two rentals be taxed at the lower rate, as I don't have any other taxable income. Last year and since 2011 I returned all rentals under my wifes income and paid tax,prsi and USC at the marginal rate come eventhough I legally own 50% of the rentals .So, I've corrected that for both 2020 and 2021.

The other is adjustment was maximising AVC contributions and that has generated a 9k reduction in her income tax.

After all of that it looks like the overpayment in 2020 and the 2021 preliminary looks like Revenue will owe us approximately 4k .

I was thinking that if it was possible I'd leave that amount with the Revenue and then in early 2022 do the actual 2021 return and see what washes out. We also have a CGT liability for 2021 which needs to be paid in December, its 3.5k and was wondering if there was money on the account if we could offset the CGT liability.

Any advice would be appreciated.

 

[jpd]

Yes - you only have one account witht Revenue so you can offset the CGT with the overpayment.

However, once the Pay & File date has passed, you will probably that Revenue will send you a cheque or reimburse you via a bank transfer

 

[Paul O Mahoney]

Yes - you only have one account witht Revenue so you can offset the CGT with the overpayment.

However, once the Pay & File date has passed, you will probably that Revenue will send you a cheque or reimburse you via a bank transfer

So if I submit the CGT in November before pay and file date they will offset? Or do I indicate that on the CGT submission.

We pay by DD and it comes out mid November, so I was trying to say if I submitted the CGT before that they could offset?

 

[jpd]

The CGT submission and payment are two different transactions - even if they are linked using the file and pay option.

The CGT File date is 31 Oct 2022 for all gains made in 2021 - the pay date is 31 Dec for tax due on gains made in Jan-Nov 2021 and 31 Jan 2022 for tax on gains made in dec 2021

I don't know what will happen if you attempt to pay the CGT before Dec 31 - nothing much so if you sure that the CGT is already known, then go ahead as soon as you get notification of the due amount

 

[Paul O Mahoney]

The CGT submission and payment are two different transactions - even if they are linked using the file and pay option.

The CGT File date is 31 Oct 2022 for all gains made in 2021 - the pay date is 31 Dec for tax due on gains made in Jan-Nov 2021 and 31 Jan 2022 for tax on gains made in dec 2021

I don't know what will happen if you attempt to pay the CGT before Dec 31 - nothing much so if you sure that the CGT is already known, then go ahead as soon as you get notification of the due amount

Thanks I'll give a whirl and see what happens can't see them being to harsh afterall I'm paying early....now theres something I never thought I'd say.

 

[PebbleBeach2020]

Can I ask if you had one property on your name and another in your wife's name, both rented out. I return the income from my house on my side of the tax form and my wife's house income under her name.

At what point would it make sense or be beneficial to not have the rental income split as above? Or does it?

 

[Paul O Mahoney]

Can I ask if you had one property on your name and another in your wife's name, both rented out. I return the income from my house on my side of the tax form and my wife's house income under her name.

At what point would it make sense or be beneficial to not have the rental income split as above? Or does it?

In our case both properties are in joint names mortgages for each are exactly the same and the rental amounts of €1400 per month for each property.

I'm a little bit confused about your second paragraph, if you're returning the rental income already in the manner you describe I can't see any advantage.

I got sick, and she got someone to manage the properties and the monthly statements were in her name and funds sent to a savings account in both names, I incorrectly assumed that the properties were hers for tax purposes and paid 52% ,but legally I was 50% owner, and 50% liable for the mortgage and the advice I got was to do what I did.

My wife pays 52% tax, including prsi etc on all marginal income and as I have no other income my property should have been taxed at the lower rate, since 2011, but I can't go back any further than 4 years.

That's my situation, where 2 people are earning and say paying similar tax on rental income I cant see any advantage over the way your doing it now, but I'm not an expert.

 

[PebbleBeach2020]

If beneficial tax wise, could look at making us joint owners of each property and/or moving ownership of both to my wife.

 

[Paul O Mahoney]

If beneficial tax wise, could look at making us joint owners of each property and/or moving ownership of both to my wife.

I'm really not knowledgeable enough to say anything to be honest, it was RedOnion here that mentioned it to me, I asked our solicitor and an accountant. In our case it definitely lessens the tax liability .