# rental tax liability



## Frank (24 Apr 2009)

I rented my house 2 years ago now.

3 bed I was living in for 3 years so all fully furnished.

I did register with the PRTB.

I never sorted out taxes, as the third year is coming around I think I need to get this sorted.

Would this need an accountant or can I just pick up forms to sort it out?

Any advice appreciated.


----------



## MattW (25 Apr 2009)

Frank,
I'm renting out a house I bought as new and lived in for a couple of years and here's a few pointers on all things tax - as I understand - and I'm open to correction. I've done this myself (with a little guidance from the revenue website, and talking to revenue agents on the phone - they can be quite helpful)

1. Stamp Duty clawback - if you didn't pay stamp duty when buying (e.g. first time buyer) and rent out property within a 5 year period of deed. This sadly is the full amount that you would have paid if you were exempt from stamp duty when purchasing. This is the form - [broken link removed]- I'm sure there's an explanation somewhere on the revenue site too as to how to fill this (I know there was when I did, I just can't seem to find it now).

2. Rental Income. I submit a tax return for rental income for the previous year. I'm paye so the form I was told to use by a revenue agent is the *form12* http://www.revenue.ie/en/tax/it/forms/form12.pdf (there's no online equivalent of this at the moment) - this covers all sorts of returns, only the rental income section was really relevant to me. In calculating the tax on the rental income there are deducation you make  e.g. interest on mortgage (not capital though), management fees, agent fees, insurance fees etc. (http://www.revenue.ie/en/tax/it/leaflets/it70.html) The last two years I've made a loss, so havn't paid any tax - but still make the tax return. I've only done 2007 and 2008 to this point, so I'm not sure how the new income levies come into it. Does anyone else know?

3. CGT. Once the poperty is no longer your PPR you will pay CGT when you sell it. I've not had to do this yet (haven't sold yet) but as the property was your PPR at the start there is a reduction. When deciding whether to sell or rent the property (really seeing where my break even point was) this was a factor - selling the house right away meant that - I wouldn't have paid stampduty, I wouldn't be paying CGT in the future - the price would have been better than selling now! Hinsight's great! I do intend to hold onto the place for 15-20 years, so fingers crossed it works out ok in the long run. The agent in revenue was helpful at explaining the CGT consideration in detail.

Hope this helps,
Matt


----------



## minion (25 Apr 2009)

Girlf said:


> You may also claim repairs & Wear and Tear of house contents, furniture etc as a deduction - 12.5% of value over 8 years.



You can claim 100% of repairs for that year.


----------



## Frank (25 Apr 2009)

Matt very informative feel more like I will give it a go myself.

Thanks for the other info as well.

I will print out the form12 and ring revenue and see where I go from there.

How about being late on the first year whats the chances of an extra charge for being late?

Do I need to submit reciepts or just hold them for a certain number of years?


----------



## MattW (25 Apr 2009)

I know if you're late paying the stamp duty clawback (if this is appropriate) there're some pretty steep interest charges - details are on that clawback form. Not sure about being late for the tax return.

To do the return you don't need receipts - you just enter the figures - you'll only need to produce receipts if they choose to do an audit on your submission. So far I haven't, but I've kept all the receipts anyway.

M


----------



## Bronte (27 Apr 2009)

If you owe tax and it's late you pay interest and possibly fines and penalties as well.  You must keep documentation for 6 years but it's advisable to keep it forever.  If you don't understand all the things you can claim against rental income you should get an accountant to set you right, this fee can allso be offset against the tax due.


----------



## Frank (27 Apr 2009)

House was bought 2nd Oct 2003 for 179000

Rented 12th May 2007 so only in for about 3.5 of the 5 years.

I think an accountant may be an idea for the first go anyway.

Thanks for all the advice.


----------



## John Rambo (27 Apr 2009)

Speak to a tax consultant.

You should make an unprompted Qualifying Disclosure ("QD") to Revenue. The tax due and interest charges cannot be avoided. However, by making a QD there should be mitigation in respect of penalties, publication (of your name) and prosecution.


----------



## LLDLY (28 Apr 2009)

I spoke to my accountant about 14 months ago on this matter. Turn out that in the Dec 07 budget they change the claw back to 3 years.


----------



## Oilean Beag (28 Apr 2009)

Clawback actually reduced to 2 years in the 2007 budget.


----------



## LLDLY (28 Apr 2009)

Even better


----------



## WaterSprite (29 Apr 2009)

LLDLY said:


> Even better



Sorry to be bearer of bad news but the 2-year clawback only applies in respect of rentals occurring after 5 Dec 2007.  If you rented the place out before that date and also before the (old 5-year) stamp duty clawback period, then the SD clawback is repayable in full.


----------



## Frank (29 Apr 2009)

Missed the first time buyers grant now this nice.


----------



## och aye (7 May 2009)

Calculating Commercial Rent - Any Ideas how to calculate amount of rent one should  charge on a premises with income of 100k.pa 
Is it a % of Income plus rent on premises (how to calculate ?)

Would appreciate any replies


----------



## airgead07 (8 May 2009)

Am I corect in saying that the stamp duty clawback only applies if you rent the house out within 2 years of purchase and before Dec 07??


----------



## airgead07 (8 May 2009)

In claiming relief against the rental income, is that 12.5% of the purchase price over 8 years. For example, cost = €242,000, 12.5% = €30,250, over 8 years = €3,781.25. Is this correct? Is this an automatic relief you can claim or do you have to show receipts of purchases?


----------



## WaterSprite (8 May 2009)

airgead07 said:


> In claiming relief against the rental income, is that 12.5% of the purchase price over 8 years. For example, cost = €242,000, 12.5% = €30,250, over 8 years = €3,781.25. Is this correct? Is this an automatic relief you can claim or do you have to show receipts of purchases?



Are you talking about a section 23 property or something like that?

If not, then you can't normally claim the purchase price of a property against rental income - only 75% of the mortgage interest (for mortgage on that property) plus allowable expenses.


----------



## airgead07 (8 May 2009)

refering to post by Girlf on 25 april last.


----------



## WaterSprite (8 May 2009)

airgead07 said:


> refering to post by Girlf on 25 april last.



That reference relates to furniture/contents only. It's 12.5% per year (so 8 years = 100%).  So, you buy a new sofa for the tenants on day 1, you can claim €100 per year of that cost against rental income.  Doesn't apply to purchase price of the property.


----------



## airgead07 (8 May 2009)

Been a long week, brain not working tonight, was thinking that would be a bit generous.Thanks again


----------



## BaileyMc (8 May 2009)

Hi,

First thing I would advise is to go and talk to a tax consultant.

John Rambo's point is very important about the unpromted qualifying disclosure.  You will be saving yourself a fortune and the humiliation of publication which could be a possibility based on the facts.

Until you get advice do not ring Revenue!!!!

There really isn't a huge amount to preparing the tax calculations/return but given the circumstances here it may be best to get everything up to date, learn as much as you can from AAM and your advisor and then consider doing it yourself from here on in.

On the allowances for the fixtures and fittings, you will be able to claim allowances on the original items you would have purchased for the house to the extent that they are now being used by the tenants (Sofas, beds, TV, pots & pans).  However, the total period of write off is 8 years.  So you have to disallow 12.5% for each year before the house was rented.  

You can also deduct any other expenses associated with the property mortgage interest (subject to prtb registration and the new 75% restriction), ESB bills, refuse, painting, repairs etc.

Hope this is of help!


----------

