Taxation of rental income after marriage

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fonduster

Registered User
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Hi Guys,

I was just wondering what is the best course of action for tax on income after marriage.

Person A:
PAYE: 35k
Rental Income: 125k
Current expenses: 75k
Capital allowances: 5k

Person B:
PAYE: 20k

Is rental income then split between 2 of you to limit taxation? or can you move the income to person B?

By moving rental income to Person B, could this have some bearing on a Prenup(i know they are not enforceable yet in ireland) dispute in the future?

With the figures above, what type of figures can be saved vs my current situation of single person.
 
Revenue would have the current tax bands for married couples etc. Last time I checked it was €76k at low rate and higher rate there after. You can just chose to be taxed together to claim the credits. So if it's still 76K you would have €29k at top rate of tax.

Good lukc with your Wedding / Marriage
 
The example on revenue provide the following example:
""In 2019, the standard rate cut-off point for a married couple or civil partners is €44,300. If both are working, this amount is increased by the lower of the following:

  • €26,300 or
  • The amount of the income of the spouse or civil partner with the smaller income
If one person is earning €48,000 and their spouse or civil partner is earning €27,000:

The standard rate cut off point for the couple is €44,300 plus €26,300. The increase in the standard rate band is not transferable between spouses or civil partners, so the first spouse or civil partner's tax bands would be calculated as €44,300 @ 20% = €8,860 and €3,700 @ 40% = €1,480. The second spouse or civil partner's tax bands would be calculated as €26,300 @ 20% = €5,260 and €700 @ 40% = €280."""

This is PAYE though. In my case i have rental income that im specifically enquiring about rather than standard paye jobs. Once you get married is your partner able to "earn"some of the rental income to make it more tax efficient. So for example leys say my partner earned 5k per year. i earned 160k with 80k expenses. Im querying the possibility of transferring rental earning to the partner that doesnt earn as much. So for example in the revenue example above, the whole point would be so that Partner A would earn the limit of 44,300, while you would transfer rental earnings to Partner B to get them to 26,300 and pay whatever the difference is above this. It Would also impact your USC above certain limits also.
 
Is the property jointly owned - if so opt for joint assessment, it is the most tax efficient way to deal with your tax as a married couple. If the property is in your name only I understand you are responsible for the tax due.
 
@fonduster
With your rental income, you should be asking an accountant for advice.

For tax purposes, once married you should transfer the property to joint names. You'll need to discuss with the bank since you've mortgages secured on them. There is no stamp duty / capital gains on transferring to spouse.

You should opt for joint assessment even if you don't put in joint names - if in the future either of you take time off work, you can at least benefit from an increased band at the lower rate along with the personal tax credit.

Using your numbers you will have an extra 15,800 at lower tax rate after marriage.

You'll also have a decrease in USC - at the moment you're paying a surcharge because you've non-PAYE income over 100k. If you split it, the surcharge goes away.
All in you'll save about 5k in tax.
 
Thanks guys,

Yea all the questions im asking will also go to the accountant to confirm. I like to understand what i need to do as much as possible before i broach the subject to my accountant. It gives me time to think about the situation and prep questions if needed.

Do i need to get the properties transferred to joint names to avail of the extra tax relief for usc and other cut offs points etc? Is there any benefit to transferring property to joint names from a tax point of view.
 
Because you have rental income I imagine you are self assessed - see below from citizens info site

If one spouse/civil partner is self-employed, joint assessment can still apply. The flexibility this option brings can be very convenient - especially if one of you pays tax under the PAYE system and the other pays tax under the self-assessment system. Under joint assessment, you let your circumstances determine if most of the tax should be paid under PAYE or in a lump sum on assessment. This is determined by the way in which the tax credits are allocated. If you choose to pay most of your tax under PAYE, the tax credits (apart from the Employee Tax Credit and employment expenses), should be offset against the self-assessment income.

As far as I am aware the property does not have to be in joint names for tax purposes but it is much simpler for other things like inheritance etc., - but thats probably a long way off!
 
fonduster said:
Do i need to get the properties transferred to joint names to avail of the extra tax relief for usc and other cut offs points etc?
Click to expand...
Yes.
If you own 100% of the beneficial and legal ownership, then 100% of the rent is taxed as yours.
When you talk to your accountant, tell them you want something that will stand up to a Revenue audit, not 'what some people get away with'.
A partnership agreement might be adequate, but generally cleaner to hold in joint names.
 
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