Taxation treatment of interest refund

[Pinesky]

My daughter had her tracker restored in 2012. Her refund exceeded interest paid in 2012, as a result her interest paid certificate shows a credit . The refund relates to 2008-2012 inclusive.
What is the correct tax treatment .
1. Advise Revenue and apportion refund over each year.
2. Advise Revenue and take full hit in 2012.
3. Return nil as interest paid in 2012 .
Many Thanks

 

[cremeegg]

I would think, none of the above.

The interest charge for the year should be deducted as normal at 75%.

The refund should be treated as income and be subject to tax.

Can you treat only 75% of the refund as income? For most of those years the interest was only allowed at 75%.

I suggest that you think out the most beneficial treatment you can and write to Revenue telling them this is what you are doing, if they don't object then use that.

I am assuming we are talking about an investment property.

 

[Pinesky]

Thanks. I really think it's not income it's a refund of interest paid. If it was a refund for non allowable intetest you would not deem it income. It's because it's allowable income on an investment property that the tax treatment issue arises.