Form 12 tax return query

[lamb]

Hi All

I have an investment property with an interest only mortgage and 2006 was my first year renting it. My rental income is 750 per month ( 9000pa) and the mortgage is 700 per month( 8400pa). In my form 12 I have deducted the costs of my house insurance, furniture etc. My query is the fact that it is an interest only mortgage do I get a further tax benefit.

Hope my query makes sense.


L

 

[webtax]

have you registered with the prtb? you have to in order to claim your interest deduction (i'm not sure what you mean about a further tax benefit). also, you don't claim your furniture as an expenses, as you should claim it through the wear & tear allowance.

 

[lamb]

Yes.. Registered with PRTB about 2 weeks after getting tenants in...sorry meant to say W&T allowance. I mean as it is an interest only mortgage what kind of tax relief can i expect if any .
regards
L

 

[Dreamerb]

The full amount of the interest can be offset againt rental income. i.e. in your example, your rental income is €9000. Your deductibles are €8400 interest, and whatever the depreciation and insurance costs are. In fact, it sopunds as though you'll be in no better than a break-even situation, and maybe a loss.

You *must* be registered with the PRTB (and have to confirm this and produce evidence in case of a revenue audit) to be allowed offset interest against the rent received, but the cost of registration is also deductible.

Revenue told me [edit: inaccurately] that for rent in excess of about €3000, a Form 11E should be returned instead of a Form 12.

Edit: Yes I was surprised, yes I did query it - but had since decided that I was submitting a Form 12 anyway since it's just more appropriate. Cheers, webtax and DonKing for validating that for me!

 

[lamb]

Thanks for prompt response dreamerb..your answer makes sense and i will also submit the form 11E

 

[webtax]

Revenue told me that for rent in excess of about €3000, a Form 11E should be returned instead of a Form 12.

Should that not be rental profit of €3,175 or higher (and as lamb is losing money on the property, form 12 is what should be submitted)?

 

[DonKing]

Should that not be rental profit of €3,175 or higher (and as lamb is losing money on the property, form 12 is what should be submitted)?

Webtax, you are quite right it's rental profit greater than €3,175.


Lamb, I find it quite surprising that you bought an investment property and you didn't know that you could deduct the mortgage interest against your rental income when calculating taxable profit.

 

[lamb]

Hi Donking

Yes... I have to admit to a little bit ignorance when it comes to revenue/tax, but i am learning the hardway