How to measure fairness?

Maoilseachlainn

Registered User
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I know nothing about money, so here's my question:

Two neighbours (A&B) are in a legal tussle with a third.

A is a PAYE payer and lives in their home.

B is renting their property.

Costs are €12,000 divided equally between the two.

Can someone put a figure on what seems like it might be a large disparity:

"A" pays the legal fees after paying PAYE.

"B" pays the fees and claims it against rental income.

In other words: If "A" pays *after* tax, and "B" pays *before* tax, is there not a significant net benefit to "B"?

Please, no descent into the thickets of detail here. Just a general view of the issue.

Thanks.
 
Unfortunately the "thickets of detail" are entirely relevant here.

B doesn't get a tax deduction just because they're not a PAYE taxpayer. They get a tax deduction only if the legal costs are a revenue expense of their property letting business. It's hard to see how the scenario you describe could arise in the real world...
 
Surely both owe €6,000??

It doesn't matter how they off set it against their particular circumstances once they both pay half!

Being personally tax efficient is nobody's business but to the individuals themselves and Revenue.

They both write a cheque for €6k, pay the bill and they do their own thing afterwards.
 
Unfortunately the "thickets of detail" are entirely relevant here.

B doesn't get a tax deduction just because they're not a PAYE taxpayer. They get a tax deduction only if the legal costs are a revenue expense of their property letting business. It's hard to see how the scenario you describe could arise in the real world...

I'm an accounting illiterate. But lets just say:

B as a landlord gets 20,000 in rent, they offset 2,000 in management fees, plus 6,000 in legal costs. they pay tax on 12,000

A as a homeowner gets no rent, and pays 6,000 out of their after tax PAYE earnings.

Logic suggests B fares better than A.
 
So what? All our taxation levels vary to some degree or another due to income levels or personal tax-credits. If A had a disabled child, had a disabled child allowance / carer's allowances, got their cars free of VRT, got diesel tax rebates, parking privileges when transporting their child and B had none of these taxation benefits, if that fair?
 
I'm an accounting illiterate. But lets just say:

B as a landlord gets 20,000 in rent, they offset 2,000 in management fees, plus 6,000 in legal costs. they pay tax on 12,000

A as a homeowner gets no rent, and pays 6,000 out of their after tax PAYE earnings.

Logic suggests B fares better than A.

Well you'll have to learn to "read" accounting, or accept me at face value that you're effectively talking gibberish.

A person who has a self employed source of income doesn't get to offset whatever they like. Your question is the same as asking why person B can deduct the cost of their weekly groceries, or the family trip to Lanzarote, from their "before tax" income - and the answer is the same - they can't.*





* Well they can TRY, because they file a self assessed tax return, but they will end up owing interest and penalties when their incorrect claim comes to light.
 
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