# Got my tracker back from Ulster Bank. But a Buy to Let. How to treat refund for tax purposes?



## blured (27 Apr 2017)

Got my letter this morning confirming I was being put back on my tracker - so happy! Have a question though, the property was purchased as a PPR, but since 2009 has been rented out. If/when I get a refund of the interest overpaid, does this mean I will need to make revised tax returns to revenue seeing as I would have claimed the interest as an expense in my tax returns?


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## Brendan Burgess (27 Apr 2017)

Well done!

I would normally say yes. You have an income this year of the interest refund and should pay tax on it. 

However, AIB has said in its letters that there is no tax liability. I can't see how that extends to Buy to Lets though.

Brendan


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## Sarenco (27 Apr 2017)

Brendan Burgess said:


> AIB has said in its letters that there is no tax liability.


Not quite Brendan.

Here's what AIB actually said:-


danika05 said:


> "As a first step, AIB will place the affected customers on the correct tracker rate. The bank will also be required to offer a refund of their overpayment of interest, and financial compensation to customers, including discharging any _*tax liability that might occur for the borrower."*_


Does this extend to refunding to Revenue any mortgage interest relief or deduction which has been over-claimed in the past?

AIB won't know the individual tax position of any of its customers so how can it calculate and discharge these liabilities?

Is it fair that the value of any redress or compensation payments will be dependant on the individual tax position of a customer?

These issues have been "live" for nearly two years now and there is still zero guidance from Revenue.

Here's a recent thread on the issue -
https://www.askaboutmoney.com/threads/will-tracker-refund-and-compensation-be-taxable.201278/


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## blured (27 Apr 2017)

Thanks Sarenco - fully compliant from the mortgage interest relief side of things, question was about the interest I deducted as an expense on my Income tax returns, which if we get compensation/redress for, could mean I essentially over-claimed relief. Have followed that thread you referenced, hopefully the Central Bank and or Revenue will clarify the position soon


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## Joe_90 (27 Apr 2017)

The policy seems to be the government want the banks to sort out their customers and are not too bothered if the Revenue follow up on it.

I'd have thought if you did not pay the interest you over claimed your expenses and therefore have a tax liability but that does not seem to be the case.


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## Sarenco (27 Apr 2017)

blured said:


> Thanks Sarenco - fully compliant from the mortgage interest relief side of things, question was about the interest I deducted as an expense on my Income tax returns, which if we get compensation/redress for, could mean I essentially over-claimed relief.



Understood bluered - I tried to capture both scenarios (PPRs and rentals) in my previous post by referring to over-claimed reliefs or deductions but I should have been clearer.

I'm actually surprised that impacted borrowers seem to be so relaxed about this issue - it could give rise to a fairly significant future tax bill.

Maybe Joe90 is right and the unofficial Revenue policy is simply to turn a blind eye - seems an odd way to discharge their statutory functions.


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## SirMille (27 Apr 2017)

Sarenco said:


> Maybe Joe90 is right and the unofficial Revenue policy is simply to turn a blind eye - seems an odd way to discharge their statutory functions.



Seems it's the least they could do for the poor sods whose government completely let them down!

"discharge their statutory functions"
Seriously?


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## Mackem (28 Apr 2017)

blured said:


> Thanks Sarenco - fully compliant from the mortgage interest relief side of things, question was about the interest I deducted as an expense on my Income tax returns, which if we get compensation/redress for, could mean I essentially over-claimed relief. Have followed that thread you referenced, hopefully the Central Bank and or Revenue will clarify the position soon


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## Sarenco (28 Apr 2017)

SirMille said:


> Seriously?



Yes, seriously!

Firstly, we are fortunate to live in a democracy and I'm not comfortable with the idea of unelected Revenue officials deciding which of our tax laws to enforce or ignore. 

Secondly, no State entity caused or encouraged the relevant banks to breach their contractual or regulatory obligations so why should taxpayers further compensate impacted borrowers? 

Finally, I happen to think that the value of any compensation or redress payment should not depend on the tax position of an impacted borrower.  For example, if a BTL investor does not have to repay any "over-claimed" interest expenses, then the value of their remedy is much greater than the value of the same remedy to an owner occupier who obviously would never have benefitted from such claims.  Does that seem fair to you?


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