# 1st time Landlord mid '10  not registered with PRTB & not paying tax - consequences?



## Rupert1 (11 Jan 2011)

I bought my first house in Tipperary in the boom and last summer I lost my job and had to move back to my parents house in Laois. I decided to rent out my house as I was left with no other option. 

Last Summer, I rented it out to two tenants who have been in the house ever since. I had never heard of the PRTB until now - hence my reason for not registering with them. 

I don't pay tax on the rental income as the rent I am receiving doesn't even come close to covering the mortgage and I am in serious financial difficulties as I am not working at the moment and have no income. 

After doing some research online I am quite nervous, especially because the tenant rang me today saying he was applying for Rent Relief.

What consequences will I have to face?


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## shesells (11 Jan 2011)

You don't need to panic too much on the tax front...the 2010 tax return is due in Autumn 2011. However you are wrong in assuming that just because the rent doesn't cover the mortgage you won't have to pay income tax on it. You are taxed on the entire income less a deduction for interest on the mortgage (which is being reduced), wear and tear on fixtures and fittings and certain expenses associated with the property.

The tax you do need to pay is the NPPR tax of €200 per year, they charge a late fee per month delay in paying.

You do also need to register with the PRTB, again there is a penalty fee for registering late.

Not that I'm pointing you away from AAM, but www.irishlandlord.com has a lot of information for novice landlords. Do try to get your house in order regarding these obligations, the fines for non payment of taxes/PRTB are serious. I don't mean to scare you, but you should probably talk to MABS to help you deal with your financial problems including these.


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## Bronte (12 Jan 2011)

You are right to be nervous but lucky that you're in time to sort it out. Register with the PRTB today, if you are not registered then you cannnot claim mortgage interest relief.   

Revenue are checking the tenant's who claim rent relief against properties where no rent is declared. 

If you haven't been paying the NPPR there are penalties built into it so that it doesn't make sense not to pay it.  

Why don't you sell the house instead of renting it if the rent doesn't cover the mortgage.  

How are your subsidising the mortgage if you have no income.  Are you not getting some kind of dole.  

You should do the money makeover thread to help you sort out your finances.  

You're lucky you've started to realise the implications of what you're doing so soon after renting.  Better to sleep easy than have nightmares.


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## twofor1 (12 Jan 2011)

If the house was your PPR and only became a rental property last summer, then there is no NPPR liability for 2010.

As things stand you will have a liability for 2011, to avoid penalties pay it by 30th June.

*When do you become liable to pay the charge? *
As set out in the Local Government (Charges) Act 2009, liability to pay the charge is determined on the basis of ownership of the property in question on a single day each year. This date, which is called the "liability date", is 31st July for 2009 and is 31st March in 2010 and future years. The charge must be paid within three months of the liability date (31st October in 2009 and 30th June for 2010) in order to avoid late payment charges.
https://www.nppr.ie/Faq.aspx#fk13


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## vandriver (12 Jan 2011)

It is not relevant in this case but for any future tenants,rent relief was abolished on 7th December 2010


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## Rupert1 (12 Jan 2011)

Thanks for the replies.
So I can't be penalised then?

I can't sell my house because the sale money would not cover what is owed to the bank!


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## Panacea (12 Jan 2011)

Are you still getting mortgage interest relief at source?


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## shesells (12 Jan 2011)

Rupert1 said:


> Thanks for the replies.
> So I can't be penalised then?
> 
> I can't sell my house because the sale money would not cover what is owed to the bank!



The penalties could be small..delay on the NPPR if it applies, and the late PRTB registration fee. The issue of tax relief at source is a bigger concern now.


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## Bronte (13 Jan 2011)

Rupert1 said:


> I can't sell my house because the sale money would not cover what is owed to the bank!


 
Have you discussed it with your bank, would they allow you to sell and pay back the negative equity as a loan for example.


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## Rupert1 (13 Jan 2011)

Panacea said:


> Are you still getting mortgage interest relief at source?


 
Yes, I am.


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## WindUp (13 Jan 2011)

get that stopped asap- are you on a tracker mortgage? if so; is their anything in your agreement that you lose it, if renting the property?


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## Rupert1 (13 Jan 2011)

Ok, so I have filled out my PRTB form and I will be submitting it.

What else do I have to do now?


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## Panacea (13 Jan 2011)

As the property it is not your principal private residence you are not entitled to mortgage interest relief at source and you should advise your bank accordingly.

Obviously this will result in the bank becoming aware that you are renting the property on a commercial basis so you need to understand the potential implications  this may have on the terms of your mortgage.

Do you have appropriate insurance cover or have you left the your policy unchanged as if you were living in the property yourself?

Whose name are the utility bills in?


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## mlocmloc (13 Jan 2011)

No problem, You can back date the PRTB but do this on line and immediatly. No need to registor if you can prove that you live there . Get some of your mail sent to this address. Also in this case If the rent is less than €10K I think you have no tax issue but check this on Revenue. Don't go near the bank without seeking advise first.


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## WindUp (13 Jan 2011)

mlocmloc said:


> No problem, You can back date the PRTB but do this on line and immediatly. No need to registor if you can prove that you live there . Get some of your mail sent to this address. Also in this case If the rent is less than €10K I think you have no tax issue but check this on Revenue. Don't go near the bank without seeking advise first.



OP has already confirmed that he does not live there


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## Rupert1 (14 Jan 2011)

I still have mail going to this address so I can prove that I still live there (e.g. car insurance, etc.)

Also, my house insurance cover has not been switched so it still looks like I live there.


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## Panacea (14 Jan 2011)

But will your house insurance cover you if anything happens and the insurance company or their assessor find out you have not been living there. Worse still will they cover you if something happens to one of your tenants or a visiting guest and they take action against you for damages?


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## Bronte (14 Jan 2011)

Rupert1 said:


> Also, my house insurance cover has not been switched so it still looks like I live there.


 
You are absolutely crazy not to have landlords insurance.


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## Purple (14 Jan 2011)

Rupert1 said:


> I still have mail going to this address so I can prove that I still live there (e.g. car insurance, etc.)
> 
> Also, my house insurance cover has not been switched so it still looks like I live there.


I don't mean to sound sanctimonious but that's just plain old fraud. If you don't live there but try to show you do in order to dodge your tax liabilities you are defrauding the exchequer. As has been pointed out your tax liabilities should be zero or close to it so it’s probably not even worth it.

Take Bronte’s (good) advice;


> You should do the money makeover thread to help you sort out your finances.


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## WindUp (14 Jan 2011)

purple said:


> i don't mean to sound sanctimonious but that's just plain old fraud. If you don't live there but try to show you do in order to dodge your tax liabilities you are defrauding the exchequer. As has been pointed out your tax liabilities should be zero or close to it so it’s probably not even worth it.
> 
> Take bronte’s (good) advice;



+1


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## shesells (15 Jan 2011)

+another 1! Offered advice in the misguided belief that the OP was a naive new landlord so am disappointed to see that some calculation was involved in an effort to deceive the authorities that this was their PPR


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## Rupert1 (16 Jan 2011)

shesells said:


> +another 1! Offered advice in the misguided belief that the OP was a naive new landlord so am disappointed to see that some calculation was involved in an effort to deceive the authorities that this was their PPR


 
There was no calculation involved to deceive anyone. The utility bills that are still going to the house (e.g. car insurance) are only still going there because there has been no renewal yet as it hasn't been a year since I moved out. That's all.


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## Steve D (16 Jan 2011)

Rupert1 said:


> There was no calculation involved to deceive anyone. The utility bills that are still going to the house (e.g. car insurance) are only still going there because there has been no renewal yet as it hasn't been a year since I moved out. That's all.



You should notify insurance companies when you change address and not wait for your renewal to come up to do it. For example, if you told your car insurance company that your car is always parked outside your old address then their calculation of the premium will be based on this. If you have an accident or if your car is stolen or damaged and the insurance company find out that you are no longer living at your old address your insurance will be void and worthless.


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## Rupert1 (16 Jan 2011)

I will ring the insurance company and let them know the house is rented.

So if I register with PRTB, what else do I need to do to be aboveboard?


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## WindUp (16 Jan 2011)

contact your bank and advise them to stop giving you mortgage interest relief


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## Rupert1 (16 Jan 2011)

WindUp said:


> contact your bank and advise them to stop giving you mortgage interest relief


 
I thought I was entitled to mortgage interest relief if I register with the PRTB thingy?


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## WindUp (16 Jan 2011)

not at source, sorry -- you are allowed offset 75% of the interest paid against your rental income however. 
The risk for you is that if you have a tracker mortgage the bank might have something in their T&C where you might lose it if renting it out


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## Rupert1 (16 Jan 2011)

I don't have a tracker mortgage. 
I don't have a clue about offsetting interest or anything like that. 

Why can't I just register with the PRTB, switch my house insurance to landlord insurance, and leave it at that?


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## shesells (16 Jan 2011)

Because you are not entitled to tax relief at source and must cancel this straight away. You are obliged to complete a tax return each year and as part of that will need a mortgage interest certificate from your mortgage provider, this will reduce your tax liability.

It confuses me that you say some bills only go to your house because there has been no renewal but you also said that that makes it look like you live there..which is why it appeared that there was some calculation.


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## WindUp (16 Jan 2011)

if only it was that simple.....

its not too bad though; as things stand you are claiming a tax relief which you are not entitled to -Mortgage interest relief is only available for your principal private residence.

you will need to pay tax on your 2010 rental income in October 2011- the tax is calculated on Rental Income less 75% of your mortage interest (not capital) paid less capital allowances on furniture fixtures and fittings (8% of cost)  and any other costs.

there is a guide on the revenue website which i suggest you download


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## T McGibney (17 Jan 2011)

WindUp said:


> capital allowances on furniture fixtures and fittings (8% of cost)  and any other costs.



Capital allowances are technically not allowable on fixtures.

The annual capital allowance is 12.5% of cost.


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## WindUp (17 Jan 2011)

sorry -- meant to say 1/8 per year - you are correct on the fixtures


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## Greta (17 Jan 2011)

Guys, OP says he is clueless and he certainly sounds like it so I think finer details like capital allowances, fixtures etc will only confuse him even more.

I generally think that it's quite possible to manage a tax return oneself, and I have always managed it and never used an accountant, but I think in OP's case an accountant is indicated - OP won't be able to file the tax return properly on his own. And he doesn't sound as if he is going to learn all about tax in the meantime - there are loads of information on the Revenue website, but he keeps coming back here with questions like "what do I do next?"

So I think the best advice for him would be "hire an accountant".


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## PaddyBloggit (17 Jan 2011)

+ 1 ... and hire that accountant pretty quick too!


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## Bronte (17 Jan 2011)

Rupert1 said:


> I thought I was entitled to mortgage interest relief if I register with the PRTB thingy?


 
You really need to get your act together on this.  Look up this website under investment property, then look up revenue.ie for tax on rental income and look up irishlandlord.com for advice.  

There are two types of mortgage interest relief.

TRS - tax relief at source

This is for people who live in their own home and is deducted by revenue directly with your mortgage payments in the bank.  You need to contact revenue and cancel this.  Do not contact your bank. 

Mortgage interest relief @ 75%

This is for landlords, you take your yearly mortgage interest and are allowed to deduct 75% from your rental income. 

Wear and Tear on furniture and fittings

This is at 12.% for 8 years meaning you write off 100%.

Insurance changes

Should only be done in writing with proof of posting or delivery

Utilities

Car insurance is not a utility.  For what purpose did you post the fact that you can prove you live there still?

How are you going to pay tax on rental income profit (if any)?

Accountant

You need one


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