what is preliminary tax

Hi,

I am submitting returns for a rental property first rented out in 2009, however i am told i have to pay tax for 2009 and prelimary tax for 2010. So im paying 2 years tax essentially, so next year 2011 what tax am i paying is it just 2011 tax? So does it mean that you only pay 2 yrs tax the first year I sumitt returns to revenue and one years tax every year after that.????

I really appreciate someone explaining this to me.....

Thanks a mil
C

Basically you have to pay the income tax on rental income (and other none PAYE income) in advance. So you pay the tax on the 2010 income in Nov 2010, etc

Thus you have to estimate what your 2010 income will be and pay it in November 2010. Obviously, you didn't do this in 2009 as it was the first year of rental income. So now you are paying for 2009 and also your 2010 preliminary.

In 2011, after submitting your 2010 tax return you will have to pay some more, if your estimate was too low, or you will get a refund, if your estimate was too high.

The estimate can be based on a number of options but if your estimate turns out to be too low, the Revenue can apply penalties. In general, the estimate for 2010 will be based on the 2009 figure but you are at liberty to make your own estimate, with the provisio that too low an estimate can leave you open to penalties and late payments interest.

You are obliged to pay the lower of

1. 90% of your eventual 2010 liability
2. 100% of your 2009 liability

If do this, you avoid the possibility of interest being charged on underpayments.

Thanks a mil for the replies , I get it now. Pity the revenue site couldnt be as good at explaining things.
C