# Forced landlord, not doing what I should be



## JohnMc (25 Oct 2018)

Hi all

I am hoping to get some guidance on what I should do. I bought my house in 2007 (recently involved in tracker redress which is beneficial). A change of career to a less well paying career with less prospects in 2011 resulted in me making the decision to emigrate to the UK for work purposes in 2013. 

Since late 2013 I've rented this property and it has been rented since. I have no intention of going back to the house and I plan to hold it till it is paid off in 23 years or so. 

I was still in receipt of mortgage interest relief (after I emigrated to the UK) and I got a letter to the mortgaged address from the revenue saying as I've moved out it was no longer my principal private residence and I need to pay back that money, approx €5k.

I also have not registered as a landlord. I have never made any profit from the property and it costs me money to maintain. Only in the last 3 month due to tracker redress it is being profitable. 

My question is as follows:
Will the revenue come after someone like me who was in negative equity, was forced to emigrate and making a loss on this property? If yes, the tax bill would be high (which I have not accounted for one bit)
Should I register as a landlord?
Any other advice would be great that someone thinks would be useful.

Thanks


----------



## cremeegg (25 Oct 2018)

JohnMc said:


> I was still in receipt of mortgage interest relief (after I emigrated to the UK) and I got a letter to the mortgaged address from the revenue saying as I've moved out it was no longer my principal private residence and I need to pay back that money, approx €5k.



This isn't going away by itself.

The Revenue is unlikely to proactively chase you to the UK, but they could put a charge on the house.

If you have never made any profit from the property then there may be no tax payable.


----------



## JohnMc (25 Oct 2018)

Thank you cremeegg. Yes that is my feeling too and I now feel better about dealing with it considering recent tracker redress benefit. 

I've seen this website in another thread and it is quite informative mcgibney.ie/2012/12/24/irish-property-living-abroad-what-to-do-about-tax/

When you say a charge, does that mean if I try to sell it they could take a portion of the sale value to cover what they owe?

Cheers


----------



## llgon (25 Oct 2018)

The fact that you were in negative equity and forced to emigrate will make no difference to Revenue.  

Are you sure you were making a loss? You cannot include any capital repayment in your costs and in recent years a lot of the interest paid is not allowable as a cost either.  Unless you have been renting it for a very small amount I would expect that it has been profitable, at least as far as Revenue are concerned.


----------



## JohnMc (25 Oct 2018)

Thanks IIgon

I can check my bank statements to confirm but I am pretty sure in 2013 I rented it for 900 and my mortgage was 1300. I put the rent up to 1000 when the environment changed (probably a lot later than I should have as my tenants were good people). Approx 18 months ago I put it up to 1100 which is still cheap. I changed terms with my bank and got monthly payments down to 1150 approx 18 months ago. 
Yes, maybe revenue if they do not allow all interest will have their own workings. I think by the sounds of it and from what cremeegg said it is not going away and I better address it soon rather than let the problem grow.

Thanks.


----------



## mugsymugsy (25 Oct 2018)

As tough as it is you either bury your head in the sand and it will eventually catch up at a later date or you can look to sort it out sooner. Either way is not going to be fun but hopefully things will improve


----------



## cliqueentour (25 Oct 2018)

Not wanting to scare you but you are in trouble and need to sort this immediately. Its only going to get worse.

You haven't registered as a landlord, first mistake. This means you cannot wrote off any costs against income. 

Secondly, you continued to claim mortgage interest relief even though u didn't live there. Some people would call that fraud. That revenue are only looking for this money to be repaid and not adding interest and penalties, my advice would be to pay this back asap.

Thirdly, u think u made a loss and aren't liable for tax. You are wrong. Your repayments might have been 1300 and rent 900 but the repayments included capital element to them. So your interest repayment was say 400 a month. U are up 500 a mo th so approximately 250 a month due in tax. That's 3k a year for 5 years plus interest and charges.

Like I said, I don't wanna scare you, but revenue aren't going to drop this. Get professional advice immediately or engage with revenue and put a payment plan in place. None of us like.paying tax but pay revenue and keep them happy would be sound advice. 

You can have the benefit of doubt and say you are niave as opposed to tax dodging.


----------



## Protocol (25 Oct 2018)

JohnMc said:


> Thanks IIgon
> 
> I can check my bank statements to confirm but I am pretty sure in 2013 I rented it for 900 and my mortgage was 1300. I put the rent up to 1000 when the environment changed (probably a lot later than I should have as my tenants were good people). Approx 18 months ago I put it up to 1100 which is still cheap. I changed terms with my bank and got monthly payments down to 1150 approx 18 months ago.
> Yes, maybe revenue if they do not allow all interest will have their own workings. I think by the sounds of it and from what cremeegg said it is not going away and I better address it soon rather than let the problem grow.



Bear in mind that it's mortgage _*interest *_that is deducted to calculate the profit.


----------



## Sarenco (25 Oct 2018)

To add to your woes, I’m afraid the mortgage interest payments (never mind the principal repayments) are not deductible for tax purposes if you haven’t registered with the RTB.

I think you should try and gather as much relevant documentation as possible on your rental income and costs (bank statements, etc.) and make an appointment to see a good accountant.  

The situation may not be as bad as you fear and Revenue can be fairly reasonable if you approach them with your hands up.

Best of luck.


----------



## JohnMc (25 Oct 2018)

Thanks all. I will do this. My friend is an accountant and he is going to talk to me this weekend. 
cliqueentour: the mortgage is a 35 year so a lot of the payments I was making was interest. I take your point this is not possible to write off if I am not registered. I will try to sort it out. Thanks for the help.


----------



## Bronte (25 Oct 2018)

Some incorrect information.

You can back register with the RTB.

Means interest is deductable at 75%. 

Either way, all costs are deductible.

Can you do a year by year rental income and expenditure please.


----------



## Sarenco (25 Oct 2018)

@Bronte

I don’t think anybody said it wasn’t possible to register with the RTB for earlier periods.

The amount of interest that is deductible once the relevant tenancy or tenancies is/are registered with the RTB depends on the year in question.  For example, you can deduct 80% of interest payments to calculate your rental profit for 2017, 85% for 2018 and it will be possible to deduct 100% from 2019 onwards.

A good accountant will sort through this in jig time.


----------



## JohnMc (26 Oct 2018)

Thanks Bronte and Sarenco. An interesting nights sleep but good to hear this news this morning. I will register with RTB and get it sorted.

I can do a year by year rental and expenditure. I have all my mortgage statements so I know how much interest I paid. I have a very good idea of rent and when it was increased and I've got expenses like a management fee which I hope can go against any tax payable. I also have some repair costs painting etc, no receipts of course. I will try get on this in the next day or so. Have a good day.


----------



## Brendan Burgess (26 Oct 2018)

JohnMc said:


> Since late 2013 I've rented this property and it has been rented since



Sorry, for giving you something else to worry about, but you do need to sort it out.

There was a charge called the NPPR tax which finished in 2013.

https://www.nppr.ie/default.aspx

While it was only €200 , you would now owe €750 including penalties for late payment. 

You might well get Revenue to waive it if you rented the property very late in 2013.  But you do need to address it because when you sell your house, you will need a certificate to say it was paid or exempt.  So get it sorted as well. 

Brendan


----------



## Bronte (26 Oct 2018)

Sarenco said:


> @Bronte
> 
> I don’t think anybody said it wasn’t possible to register with the RTB for earlier periods.
> 
> ...



I agree that he needs a good accountant.  But he can help himself by going into all his records and outlining them on here so we can see if he missed anything. The mortgage interest is useless to him as it is only for 2017 which is now, but it's no good for 2013 - 2016.  But the good news is he will have wear and tear.  That might be high.


----------



## Sarenco (26 Oct 2018)

Bronte said:


> The mortgage interest is useless to him as it is only for 2017 which is now, but it's no good for 2013 - 2016


I'm not sure what you mean by that.


----------



## renter45 (26 Oct 2018)

Bronte said:


> I agree that he needs a good accountant.  But he can help himself by going into all his records and outlining them on here so we can see if he missed anything. The mortgage interest is useless to him as it is only for 2017 which is now, but it's no good for 2013 - 2016.  *But the good news is he will have wear and tear*.  That might be high.


Does that have to be backed up with receipts? (assume carpets, wooden floors. blinds etc..)


----------



## cremeegg (26 Oct 2018)

renter45 said:


> Does that have to be backed up with receipts? (assume carpets, wooden floors. blinds etc..)



No you can just make the expenses up.


----------



## JohnMc (26 Oct 2018)

Hi all, thanks for responses. I will get it sorted, its a priority. I think I'm going to work through it myself first and try make sense of it and then call in some professional advice, hopefully in the shape of my friend who might be able to help. The below calculation is for 2013 when it was rented out in October. Am I on the right lines here? Am I reading right from what Bronte said that I can't claim a deduction on my mortgage interest for 2013-2016, I hope I am reading that wrong. I can't seem to add an excel attachment.

                     Rental Income   Allowable as deduction            Total (tax payable)
Oct-13                   900.00
Nov-13                   900.00
Dec-13                   900.00
                                                                                               2,700.00
Mortgage Interest
Oct-13                   979.11                 734.33
Nov-13                   977.72                733.29
Dec-13                   976.33                732.25
                                                                                               2,199.87
Other expenses
Oct-13 Painting                                 600.00                                 600.00
Nov-13
Dec-13 Maintenance charge               225.00                                  225.00
Oct-Dec Mortgage life insurance           66 66                                    66.66
Tax to be paid                                                                         -     390.87


----------



## JohnMc (26 Oct 2018)

Sorry that is not saving the way I was hoping. 
In summary:

Rental income in 2013 = 2700
Deduction:
Interest                         -2199.87
Other exps
Paint                              -600
Maintenance charge         - 225
Life insurance                  -66.66
Tax to be paid                  -390.87


----------



## cliqueentour (26 Oct 2018)

No that's wrong. Are u repaying 244 euro a month in capital repayments??? Yr mortgage must be small.


----------



## JohnMc (27 Oct 2018)

Yes I'd say that is all. 35yr 280k. Probably 4.5% back then.


----------



## cliqueentour (27 Oct 2018)

Those figures don't stack up. Regardless, you have bigger worries with the tax man. I hope you resolve yr debts with them amicably.


----------



## Bronte (29 Oct 2018)

*2013*

Rent: 2700
Mortgage Interest: 2932 X 75% = 2199
House Insurance: 66
Life Insurance: ??
Maintenance: 225
Repairs: ??
Wear and Tear:
*2014
*
Rent: 10,800
Mortgage Interest: 11,728 X 75% =8796
House Insurance: 264
Life Insurance: ??
Maintenance: 900
Repairs: ??
Wear and Tear: this should be sizable.

Observations:

You need to put a figure on your furniture/white goods to get an idea of how much you can include for Wear and Tear, which is deducted at 12.5% over 8 years.  How about you put up a list and value on here.  Yes you should have receipts but if you don't a *reasonable *value will be fine.

Get a copy of your annual interest cert and take the figure for total interest from there.

Register with the RTB immediately, that's 180 to deduct in the 2018 returns next year.  If you've had more than one tenant you need to make more than one RTB registration.

Looks to me that by the time you add in Wear and Tear you won't have any tax to pay for the earlier years, which is a good thing because of penalties and interest.


----------



## cremeegg (29 Oct 2018)

Bronte said:


> Mortgage Interest: 2932 X 75% = 2199



€280,000 mortgage at 4.5% is only €1,050 interest per month, giving a deductible of just €787


----------



## Bronte (29 Oct 2018)

cremeegg said:


> €280,000 mortgage at 4.5% is only €1,050 interest per month, giving a deductible of just €787


I've no idea Cream egg I was just using the figures John gave. I'll go back and double check.  And I can amendment the figures then.


----------



## Bronte (29 Oct 2018)

*NPPR*

Here you have good news. And you've very lucky

http://www.citizensinformation.ie/e...uthority_charges_on_residential_property.html

_If you owned residential property on the liability date in any of the years 2009 to 2013, and it was not your only or main residence on that date, you were liable to pay the charge of €200. The first liability date was 31 July 2009. For each year from 2010 to 2013, the liability date was 31 March.
_
- John did not let his property until Octover 2013, so as the liability date of 31st March does not apply he is home free on this one.

Advise: (to John and other posters) I had to get a certificate to prove that during 2009- 2013 that a home I was selling as executor was a principal private residence, everybody will need this and it's better to get that now rather than down the line when it's harder to prove things.

*Household charge*

That only applied in 2012.  But if you didn't pay it back then you certainly will now. and it's €200

*LPT*

You need to register and pay this. And this is where they catch you for the household charge.  As that's now in the revenue online system.


----------



## Bronte (29 Oct 2018)

cremeegg said:


> €280,000 mortgage at 4.5% is only €1,050 interest per month, giving a deductible of just €787



280,000 X 4.5 % = 12600 annually.  So 75% is 9450.  But in 2013 it was only 3 monhts.  1050 X 3 = 3150 @ 75% is 2362.  Am I miscalculating?  The clock changes aren't helping me today.


----------



## cremeegg (29 Oct 2018)

Sorry Bronte, my bad.


----------



## JohnMc (29 Oct 2018)

Thanks all, if anybody ever up in Scotland let me know as I owe you a few pints.

I have got the ball rolling with RTB, they sent me a link which doesn't open but I have let them know but I presume they are off today (tomorrow is another day). I have got my BER guy up and running too. 

I didn't realise you could claim for W&T on stuff already in there, I will do a list Bronte, thank you. 

I did spend about 4.5k on sliding wardrobes, painting and fancy carpets around July 2013 which I could say was for upcoming renters, that was the plan at the time. I will get on it tonight when I'm home. 

Be safe out there.


----------



## Bronte (29 Oct 2018)

JohnMc said:


> I did spend about 4.5k on sliding wardrobes, painting and fancy carpets around July 2013 which I could say was for upcoming renters, that was the plan at the time. I will get on it tonight when I'm home.



Pre letting expenses are not allowed.  (painting) You can put the wardropes and carpets under wear and tear though.  It does not matter that those items were purchased originally for you. What matters is that they are in the property for the tenant's use.  As you purchased the wardrobes in 2013 you can put that 4.5K down and that gives you a W&T of 562 alone. 

Yes do a list. There are sometimes debates on here as to what is or is not an item that is properly considered a wear and tear item.

Instead of buying us a pint can you instead let us know how you get on and use the money on an accountant. There are a few on this very website that would be able to do your returns and that costs is also tax deductable.


----------



## JohnMc (29 Oct 2018)

I hear you Bronte. I will work more on it this week. A friend of mine is an accountant and I was hoping to bring it to him as much as I could completed and then he take ver, but I may get one too as my friend is extremely busy.


----------



## Bronte (29 Oct 2018)

cremeegg said:


> Sorry Bronte, my bad.



My accountant emailed me today. Because of HAP I'm due a refund, so I'll put that against prelim for next year and I'm still overpaid so Bronte is a happy camper today.  Might even rise to a bottle of bubbles to celebrate. 

A couple of things I missed which might help you:

- mortgage interest is now 80%
- but I can claim back 100% for social welfare tenants in 2019 (another bloodly procedure/process with rtb I've to figure out) that is backdated to 2016 or 2017. 
-  Above (helping landlords with social welfare tenants with extra 5% annually)  of course is now moot because they've brought 100% back from 2019 anyway


----------



## Bronte (29 Oct 2018)

JohnMc said:


> I hear you Bronte. I will work more on it this week. A friend of mine is an accountant and I was hoping to bring it to him as much as I could completed and then he take ver, but I may get one too as my friend is extremely busy.



Friends are not good as your professional - in general.  Don't you dare go near any accountant for another couple of weeks. They are very stressed currently as it's the tax deadline.

Instead focus on getting all the figures together. Put all your receipts into one binder, per year, and put in the interest cert, and copy of annual bank statements and start working on putting everything in order.

I got my accountant via this website.  And an excellent choice it was.


----------



## Bronte (29 Oct 2018)

JohnMc said:


> I have got my BER guy up and running too.
> 
> .



Much use that is to you, it never ceases to amaze me the things that people realise they ought to do but needn't do.  At least it's cheap and tax deductable. Plus you'll learn how putting in better lightbulbs is so important to the BER rating. 

Is your property in a RPZ? (City of Dublin/Cork/Galway) if yes you need to increase the rent.


----------



## JohnMc (29 Oct 2018)

How are you doing Bronte. 

I saw that on the Revenue website about social welfare recipients, all my tenants are working so it is not relevant. 

I have two good friends who are accountants and one has just completed his tax exams. Being honest one of them (friend since day one) told me years ago that Revenue don't care about people like me, obviously this was terrible advice but I can't blame him as I should have done research. My other friend has been at me every year or so to register with RTB but I have just emailed him to see would he do up the figures. He is on top of his game so this is real low level stuff, but I will see what he says first. If that doesn't work out I will look for accountants. 

Thanks for your help.


----------



## JohnMc (29 Oct 2018)

Property is in Limerick Bronte, rents are high there too and my current tenants are getting a very good deal which they know and they have stayed there a long while.
Lease agreement is up in March so I may put it up, need to give them notice too so will make call soon.


----------



## Bronte (29 Oct 2018)

JohnMc said:


> I have two good friends who are accountants and one has just completed his tax exams. Being honest one of them (friend since day one) told me years ago that Revenue don't care about people like me,



Stay away from him.  LOL.  Revenue love people like you. They get to hit you with fines and penalties and of course they don't care, because they'll catch you in the end.  You need an accountant who deals with landlords returns. 

If Limerick is not in a RPZ it's likely to go into it soon.  Make sure you abide by the notice rules.


----------



## JohnMc (29 Oct 2018)

I hear you Bronte, I hear you.


----------



## cremeegg (29 Oct 2018)

JohnMc said:


> Being honest one of them (friend since day one) told me years ago that Revenue don't care about people like me,



I think that is true. Revenue don't care about people like you. But what does that mean. I suggest it means put your returns in on time every year and in reasonable shape and Revenue will never think about you.

It does not mean you can simply ignore them altogether, as I think you have learned.


----------



## JohnMc (29 Oct 2018)

Yes lesson learned. I guess a lot of people are in a similar boat. I will sort it.


----------



## JohnMc (30 Oct 2018)

n


----------



## JohnMc (30 Oct 2018)

6


----------



## blured (30 Oct 2018)

JohnMc said:


> 2013   2014      2015 2  2016      2017   2018
> Rental Income                           2,700  10,800  10,800  11,100  12,300
> Mortgage interest deduction        2,200   8,735    8,100    8,599   7,827
> 500     2,065    2,700    2,501    4,473
> ...



If you did not register the property with the RTB in 2013-2017 then you can't deduct the Mortgage Interest - or do I have that wrong?


----------



## aristotle (30 Oct 2018)

think someone suggested you can back register with the RTB.


----------



## JohnMc (30 Oct 2018)

Yes I can back date my registration with RTB, they confirmed this thankfully.


----------



## JohnMc (30 Oct 2018)

2013 
Rental Income 2,700 
Mortgage interest deduction 2,200  
500  
Other expenses 1,229  
Rental profit / (loss) -728 
Losses carried forward 0  
Total profit / (loss) -728  
Tax rate 20% 0.2

2014 
Rental Income 10,800 
Mortgage interest deduction 8,735  
2,065 
Other expenses 2,314 
Rental profit / (loss) -249 
Losses carried forward -728 
Total profit / (loss) -977 
Tax rate 20% 0.2

2015 
Rental Income 10,800 
Mortgage interest deduction 8,100 
2,700 
Other expenses 2,314 
Rental profit / (loss) 386 
Losses carried forward -977 
Total profit / (loss) -591  
Tax rate 20% 0.2

2016 
Rental Income 11,100 
Mortgage interest deduction 8,599  
2,501 
Other expenses  2,314 
Rental profit / (loss) 187 
Losses carried forward -591  
Total profit / (loss)  -403 

2017
Rental Income 12,300
Mortgage interest deduction 7,827 
4,473 
Other expenses 2,314 
Rental profit / (loss) 2,159 
Losses carried forward -403 
Total profit / (loss) 1,756 
Tax rate 20% 0.2
Tax to pay 351.16

Rough calculations so far...


----------



## aristotle (30 Oct 2018)

Have you included claim for capital allowances, is that part of your "other expenses"?

https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-allowed.aspx


----------



## elcato (30 Oct 2018)

Are you paying insurance both life and on the property ? Any management fees ?


----------



## cliqueentour (30 Oct 2018)

If Revenue audit you, and you cannot provide receipts for capital purchases, wear and tear, repairs etc..........how are you going to explain that away?

For capital purchases you offset 12.5% over 8 years.
For repairs etc you offset them the year in question, but u do need to show receipts and proof if asked.

If I was a Revenue person and looking that you back registered 5 years and are tell me that with rental income of €45,000 from January 2014 - December 2017 and you are telling me that the tax liability over this 4 year period is €351.16 I would be auditing you for certain.

Your mortgage interest relief claiming is very high, I would have my doubts you are correct in this. 
Purchases pre-letting are not permitted.
You must have receipts for everything you are claiming.
Are you correct in that all your income is at the 20% rate of income tax?
You haven't included PRSI and USC charges either.

You are paying an effective tax rate of three quarters of one percentage of rental income of €45,000. I am paying approximately 30% on rental income for tax. Your figures are screaming out to be audited. 

If they are correct, lucky you, but you better have the proof to back it all up. If you audited and can't prove everything, there's no outlet for you and Revenue will go after you for penalities and interest etc to the full extent of the law.


----------



## elcato (30 Oct 2018)

It's seldom that  a form 12 is audited. I was also surprised that your interest was so high but I see some have checked it and they seem to stack up.


----------



## JohnMc (30 Oct 2018)

Yes aristotle I am claiming capital allowances (wear & tear) and it is part of other expenses or other deductions I should probably call it.
Elacto I have been paying 22 or so a month mortgage life insurance since I got the property. Management fee is 1000 per annum.
I hear you cliqueentour, I have taken my interest payments from the latest statements I got from the bank, they are correct and I can prove this easily. Other expenses can be proved easily too such as management fee and mortgage life insurance. Probably a bit more difficult for some of the W&T capital allowances stuff but I can try root a few things out. I was one of those people being screwed by the banks with a crazy high standard variable rate for years, hence my interest payment is high.


----------



## JohnMc (30 Oct 2018)

The negative equity generation


----------



## jim (30 Oct 2018)

Just to echo what others have said John. You need to have receipts for the purch ofbthe items you are claiming w&t for...thats my understabding. And in general you need receipts/supporting docs for everything.

If you dont and you are audited i assune youll need to pay bk revenue plus int and penos.


----------



## JohnMc (30 Oct 2018)

Thanks Jim, noted that point. I will try do as much of that as I can to make sure I have answers if they need.


----------



## Bronte (30 Oct 2018)

JohnMc said:


> Yes aristotle I am claiming capital allowances (wear & tear) and it is part of other expenses or other deductions I should probably call it.
> .



John you're getting it together.  Can you just do one post with a list for the wear and tear please.  Right down to the kettle etc.  We'll hav a look over that to see if you're missing anything.

Also delete a couple of the posts where you were only getting the figures correct, go edit, delete and put a . instead.


----------



## Bronte (30 Oct 2018)

cliqueentour said:


> If Revenue audit you, and you cannot provide receipts for capital purchases, wear and tear, repairs etc..........how are you going to explain that away?
> 
> If I was a Revenue person and looking that you back registered 5 years and are tell me that with rental income of €45,000 from January 2014 - December 2017 and you are telling me that the tax liability over this 4 year period is €351.16 I would be auditing you for certain.
> Your figures are screaming out to be audited.
> ...



Stop scaring him.  And you're way off. He'll do a return per year and unless he's randomly audited he's not likely to trigger an audit. Even if they do audit him he's nothing to worry about.  Not once his figures are correct. And he doesn't need to worry about having all the receipts.  Sure he's supposed to have them.  But for example for Wear and Tear, as long as he puts reasonable value to the couch and fridge I don't see how revenue are going to have a problem with it.   Revenue understand that a man that emigrates for work not intending to rent may not have the receipt for the kettle he purchased in Argos 7 years ago.  Also a lot of items may have been purchased on credit or bank cards so John can go back and have a look at those. 

The most important thing he does now is get an accountant to deal with all of it once he has the figures together.


----------



## Bronte (30 Oct 2018)

JohnMc said:


> 2013
> 
> Other expenses 1,229
> 
> ...



Please break these down, and I wouldn't bother with the tax/profit scenario at all yet.


----------



## jim (30 Oct 2018)

Hang on Bronte. For w&t, are receipts required or not?
If they are then he can only claim what he has receipts for.
If they are not then its open season for everyone (within reason) and I will certainly be adjusting my form 12!


----------



## JohnMc (30 Oct 2018)

I will do that Bronte. 

RTB underway. Need to get BER which is in process. Better late than never...


----------



## jim (30 Oct 2018)

Is BER the energy rating thing John? Why do you need that? You can deduct mortg protection premium as well as house insurance premium. Cost of reg with rtb (€90) and any repairs you miggt have paid for and have receiots for.

Cliqueentour, you say you pay 30% effective tax that seems very high. What expenses are you missing? Perhaps house is mortg free and so no int deduction? Or rent is very high?


----------



## JohnMc (30 Oct 2018)

It is Jim,BER is the energy rating. I thought I needed that to register with RTB, I will ask them to confirm but pretty sure its needed. Gonna get it done either way as I've asked an old friend to do it for me who works in that area. You've reminded me Jim I need to put BER and RTB registration in my 2018 calculations. 

Cliqueentour, that seems very high to me too. Only thing I can think of is that the property is almost paid back or maybe you are not claiming for all that you are allowed to.


----------



## jim (30 Oct 2018)

I didnt think you needed ber thing for rtb reg but could be wrong. I dont recall having it and im reg with them.


----------



## elcato (30 Oct 2018)

I've never had a BER in all my time registering with them but I have outsourced since so it may have changed recently.


----------



## aristotle (30 Oct 2018)

Question on the capital allowances. What happens (as in my case) where you bought a property inclusive of furniture, so I have no receipts. Can I claim cap allowance on that?


----------



## aristotle (30 Oct 2018)

jim said:


> I didnt think you needed ber thing for rtb reg but could be wrong. I dont recall having it and im reg with them.



You dont, you can still register.


----------



## JohnMc (30 Oct 2018)

Thanks all, I thought you needed BER for RTB registration. Good info.


----------



## jim (30 Oct 2018)

Aristotle, im fairly sure you need receipts for items purchased. If they were already in the house then they arent capital additions and so cap allowances dont apply. Also if they were part of the house when purchased then they were probably factored into purchase price.


----------



## cremeegg (30 Oct 2018)

jim said:


> Aristotle, im fairly sure you need receipts for items purchased. If they were already in the house then they arent capital additions and so cap allowances dont apply. Also if they were part of the house when purchased then they were probably factored into purchase price.



I do not think this is correct.

Items subject to the capital allowances which were in the house at time of first letting can be charged at an appropriate cost. I.e. sofa €1,000 new, 2 years old at first letting, estimate value €400, capitallowance 12.5% of €400.


----------



## Bronte (30 Oct 2018)

John purchased the furniture and white goods etc. Of course ideally he should have receipts, failing which a reasonable valuation of them in 2013 will be fine. Like are revenue this picky. In any case all of you are forgetting, he’s only supposed to keep receipts for 6 years. So if he declares on Jan 1 he doesn't need receipts. But this is ridiculous, his house has wear and tear items. Revenue deal in reality and are reasonable, in general.


----------



## Bronte (30 Oct 2018)

JohnMc said:


> Thanks all, I thought you needed BER for RTB registration. Good info.


You don’t, in fact for you it’s a waste of money. You will need it if you sell. And yes, you’re supposed to have it. It is a couple of hundred euro to tell you to energy bulbs are good and put a duvet on the the hot water tank. And double glazing is better than single. They even had/have courses to teach you this to qualify you to state these facts. In a certificate - the BER.


----------



## JohnMc (30 Oct 2018)

BER guy / friend cancelled. Saving of 125.
Tenants told to put duvet on hot water tank. Grand


----------



## JohnMc (30 Oct 2018)

Next time I see my friend who is telling me all this incorrect info will get a harsh word in his ear nonetheless.
Bronte: Thanks for advice. Trying to make a good stab at the Cap All W&T stuff, checking to see what is allowable. Will get on it.
Spent a lot of free time today looking through emails to work out when tenants moved in and out etc, looks like 2 rtb regstrations needed. Take it on the chin.


----------



## JohnMc (30 Oct 2018)

Capital Allowances (wear & tear)
Entrance and stairs                0      
Living Room Sofa          500.00
TV          400.00
Table          200.00
Satellite          200.00
Kitchen Sofa          400.00
Table           800.00
Music equip          150.00
Kitchen fittings (sink, cupboards)      1,500.00
Cooker and oven          400.00
Fridge          500.00
Dishwasher          300.00
Bedroom 1 Ensuite Bed and matress          500.00
Sink, shower, toilet      1,000.00
Sliding wardrobes      2,000.00
Carpet          300.00
Bedroom 2 Bed and matress          500.00
Wardrobe          300.00
Carpet          200.00
Bedroom 3 Bed and matress          500.00
Wardrobe          300.00
Carpet          200.00
Bathroom Bath          300.00
Toilet          200.00
Sink          200.00
Electric shower           300.00
Toilet downstairs Toilet          200.00
Sink          200.00
Electric fan          100.00
Balcony Outdoor table and chairs          500.00
BBQ          250.00
Total                                13,400.00
W&T allowance                0.125
Annual W&T deduction  1,675.00


----------



## cremeegg (31 Oct 2018)

The W&T allowance is not available for items which are part of the property. I think Kitchen fittings, sliding wardrobes etc would not qualify.


----------



## renter45 (31 Oct 2018)

cremeegg said:


> The W&T allowance is not available for items which are part of the property. I think Kitchen fittings, sliding wardrobes etc would not qualify.


If he has no receipts you can't submit them anyway, correct?


----------



## JohnMc (31 Oct 2018)

Like doors and things like that. But I though that would be classed as fittings, maybe I'm wrong on that. Thanks cremeegg.
Not 100% sure renter45 but Bronte was saying Revenue take a reasonable view and would not look for receipts for everything. Although of course I wont even have receipts for a lot of them as when I bought the place some of these things were in there when I got it and lived in it as my PPR. But when I started renting the place out, these items have a value which I have given them which I can claim W&T as a deduction. This is my understanding, could be wrong.


----------



## jim (31 Oct 2018)

JohnMc said:


> Like doors and things like that. But I though that would be classed as fittings, maybe I'm wrong on that. Thanks cremeegg.
> Not 100% sure renter45 but Bronte was saying Revenue take a reasonable view and would not look for receipts for everything. Although of course I wont even have receipts for a lot of them as when I bought the place some of these things were in there when I got it and lived in it as my PPR. But when I started renting the place out, these items have a value which I have given them which I can claim W&T as a deduction. This is my understanding, could be wrong.




I think this is an interesting question. I thought that one needed receipts to support any cap allowance claims but others have suggested that this may not be the case. If it isn't the case then I will be amending my form 12 and adding in a huge chunk for cap allowances.


----------



## renter45 (31 Oct 2018)

jim said:


> I think this is an interesting question. I thought that one needed receipts to support any cap allowance claims but others have suggested that this may not be the case. If it isn't the case then I will be amending my form 12 and adding in a huge chunk for cap allowances.


I queried having no receipts a few pages back and cremeegg said nope. Again similar position for floors, carpets, blinds installed when PPR but then rented out a few years later, (no idea where recipts are but still know how much it all cost)
Cremeegg are you speaking from personal experience with revenue or your own interpretation of the rules?


----------



## JohnMc (31 Oct 2018)

Some people have said getting an accountant that deals with this on a daily basis. So that's what I will do but trying to bring it up to as near complete as I can first and hopefully the accountant will be able to add some value and shine light on a few things or mistakes I have made. Accountancy fees can be used as a deduction too.


----------



## cremeegg (31 Oct 2018)

renter45 said:


> Cremeegg are you speaking from personal experience with revenue or your own interpretation of the rules?



The rules quite clearly require that you have invoices for every item, (the precise requirements for an invoice to be acceptable are very detailed, many shop receipts and certainly credit card slips, would not qualify).

The rules also require that you keep documents for 6 years. Which is less time than a capital allowance runs.

It is a self assessment system so that your own interpretation of the rules is all there is until such time as you have a Revenue audit.

I have a number of items in a rental property where I am claiming allowances based on an estimated value when they were first rented. I had photographs of the items in the file, to prove that they actually existed. And ads from done deal to support the value I was using for the second hand sofas etc.

When I had a Revenue audit, this was not raised as an issue.


----------



## jim (31 Oct 2018)

cremeegg said:


> The rules quite clearly require that you have invoices for every item, (the precise requirements for an invoice to be acceptable are very detailed, many shop receipts and certainly credit card slips, would not qualify).



The rules aren't clear at all. Yes, receipts/supporting docs are required to be kept for 6 years. However, there is no clear guidance on the revenue website or elsewhere specific to cap allowances and the requirement to hold onto receipts for all purchases of same. Unless you can point me to where it is.



cremeegg said:


> When I had a Revenue audit, this was not raised as an issue.



It seems to be ok to just use an estimate and nothing will become of it. so its open season.


----------



## torblednam (31 Oct 2018)

jim said:


> The rules aren't clear at all. Yes, receipts/supporting docs are required to be kept for 6 years. However, there is no clear guidance on the revenue website or elsewhere specific to cap allowances and the requirement to hold onto receipts for all purchases of same. Unless you can point me to where it is.



The "rules" aren't unclear at all. Tax rules are called *legislation*, and the legislation requires that such records be kept as will enable a person to make a true return. (Section 886 of the Taxes Consolidation Act 1997.) What may be sufficient in one taxpayer's case may not be in another's, due to the relative complexity / simplicity of each person's business or affairs.

In the case of a reluctant LL, nobody could reasonably expect that they would have known of the need to retain all the reciepts for their furniture and white goods, in case they later became a LL, so it is entirely reasonable that they would have to estimate the value of these items for wear & tear purposes. If the value isn't off the wall, there'll be no issues if Revenue come looking. 

If you're a long term and/or multi-property _professional_ LL, you should have the receipts to evidence your claims.



jim said:


> It seems to be ok to just use an estimate and nothing will become of it. so its open season.



Hardly. I think you need to get some perspective. If you overstate the value of the stuff in a property by €5k, you'll be claiming an additional €625 in wear & tear annually, and saving a whopping €300 or so on your tax bill. That has to be the outward limit of what you would be likely to get away with, and beyond it in some cases.


----------



## cremeegg (31 Oct 2018)

jim said:


> The rules aren't clear at all. Yes, receipts/supporting docs are required to be kept for 6 years. However, there is no clear guidance on the revenue website or elsewhere specific to cap allowances and the requirement to hold onto receipts for all purchases of same. Unless you can point me to where it is.
> 
> 
> 
> It seems to be ok to just use an estimate and nothing will become of it. so its open season.




The legislation is here

http://www.irishstatutebook.ie/eli/1997/act/39/section/885/enacted/en/html

Its self-assessment. You must interpret it as you see fit.

I certainly would not agree that it is "open season"


----------



## jim (31 Oct 2018)

Im sorry torblednam and cremegg but the rules/laws/legislation whatever you want to call it torbledman is not clear to me. There is nowhere where it definitively states that for cap allowance claims one does or doesn't need to have receipts. If it is clear where is it?

Cremeegg nowhere in that link does it talk about cap allowances and the requirement to have or not to have receipts.

I do take your point that ultimetaly its pob down to interpretation and so I reiterate my point the legislation/law/rules/guidance is not clear.


----------



## Bronte (31 Oct 2018)

Thank you Mandelbrot for confirming reasonableness, I ended up a non resident landward unexpectedly and do not have all receipts if I remember correctly.  Revenue people are realistic and reasonable in my experience. 

Creame egg, I'd be very interested in your audit, in fact I'd like one in many respects, so I'd know for sure I was doing everything correctly.


----------



## Gordon Gekko (31 Oct 2018)

In an ideal world, one has a receipt for everything.

And the legislation is quite clear; it’s 6 years from when one needs the receipt which could be 14 years in the case of a capital allowances claim.

However, Revenue are reasonable; like many, I am an accidental landlord. I had furniture and appliances which went from being my own personal stuff to being capital items in the rental property. I did not have recipts for any of the items. I estimated their market value at that time and claim capital allowances. That is a reasonable approach and one that no Revenue auditor would push back against in my view.


----------



## Bronte (31 Oct 2018)

torblednam said:


> The "rules" aren't unclear at all. Tax rules are called *legislation*, and the legislation requires that such records be kept as will enable a person to make a true return. (Section 886 of the Taxes Consolidation Act 1997.) What may be sufficient in one taxpayer's case may not be in another's, due to the relative complexity / simplicity of each person's business or affairs.
> 
> In the case of a reluctant LL, nobody could reasonably expect that they would have known of the need to retain all the reciepts for their furniture and white goods, in case they later became a LL, so it is entirely reasonable that they would have to estimate the value of these items for wear & tear purposes. If the value isn't off the wall, there'll be no issues if Revenue come looking.
> 
> ...


Funny M, wow, 300 hundred saving on an overvalue by 5 k. I'll put the settee set in as leather worth 10k!!.

Which reminds me, my 20 year IKEA settee at home needs replacing.


----------



## jim (31 Oct 2018)

But yet still there is zero clarity whatsoever from the revenue on whtehr or not receipts are required  for cap allowance claims. They either are or are not. Which is it and where is the revenue guidance on it? There is none. Apart from the general 6 yr rule re keeping receipts.

It seems you can make cap allow claims with not a receipt in sight. Yet the revenue says keep receiots for 6 yrs in case we audit you. What should people do then? There is no clarity on this point. There is interpretation and use of reasonable logic but that is all.


----------



## torblednam (31 Oct 2018)

jim said:


> But yet still there is zero clarity whatsoever from the revenue on whtehr or not receipts are required  for cap allowance claims. They either are or are not. Which is it and where is the revenue guidance on it? There is none. Apart from the general 6 yr rule re keeping receipts.
> 
> It seems you can make cap allow claims with not a receipt in sight. Yet the revenue says keep receiots for 6 yrs in case we audit you. What should people do then? There is no clarity on this point. There is interpretation and use of reasonable logic but that is all.



The 6 year rule is in the same section of the Act, section 886. It requires that you keep your records - such as YOU believe are sufficient to enable YOU to make a true return under SELF ASSESSMENT - for 6 years.

You won't get absolutes in an area like this, which you should recognise is a good thing as it allows scope for reasonableness, rather than have a black & white rule that doesn't.


----------



## jim (1 Nov 2018)

torblednam i think you linked the wrong section of the act.

Nowhere in sec 886 does it reference what you have spelled out above aoart from the 6 yr rule which is not what i am disputing. You are right when you say "it requires you to keep receiots" but thats it. There is nowhere where it says "such as you see as sufficient". 

I agree with you that there is prob no absolutes in an area like this....which is why im saying its a tad ambiguous.


----------



## torblednam (1 Nov 2018)

jim said:


> torblednam i think you linked the wrong section of the act.
> 
> Nowhere in sec 886 does it reference what you have spelled out above aoart from the 6 yr rule which is not what i am disputing. You are right when you say "it requires you to keep receiots" but thats it. There is nowhere where it says "such as you see as sufficient".
> 
> I agree with you that there is prob no absolutes in an area like this....which is why im saying its a tad ambiguous.



It says:

"shall keep, or cause to be kept on that person's behalf, such records as will enable true returns to be made for the purposes of income tax, corporation tax and capital gains tax of such profits or gains or chargeable gains."

It's not for Revenue to tell you what is or is not sufficient to enable you to make a true return. It depends on the facts of your own case, and the onus is on you to comply with the law. Revenue, if they examine your return and such records as you've based it on, might agree with you or not. 

If you have receipts for every penny, that's great, if you have only some receipts but what you've claimed is reasonable on the face of it, that'll almost certainly be fine too.


----------

