I may have painted myself into a problem

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Ferryman

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I may have painted myself into a problem.

For years I struggled with mortgage payments on a low single income, missing mortgage payments, and running into various problems. Eventually I moved home to parents, let the apartment, and struggled on for a few years, eventually getting myself back into a place of positive equity. Here is the problem.

I let a room in the apartment (2 bed) for a few years, on the basis that the rental income was below the threshold where tax was due. Then about three years ago (I'm not even sure exactly how long) I moved out, and let the whole apartment, for €800 a month. My head was in a mess with worry and stress at the time - I just needed income from anywhere, and fast.

I didn't register with PRTB (never even heard of them till afterwards) and then let things slide for the last few years. My plan was to move back into the apartment as soon as feasible, but now I don't know if I will. So now I need to straighten things out.

On a rental income of €800/month, and to register 3-4 years late with PRTB, and find out if I am due a big tax bill, can anyone advise me where I stand, what I need to do, and if I am outstanding for a big tax bill? Anything else I am missing? Should I get a financial advisor?
 
You can register with the prtb now with a tenancy commencement date three years ago. You will have to pay a late reg fee, I think its €180. You will need to do the same thing for each change of tenancy. Not a major issue.

That means that the teanacy is registered and the interest (75%) can be deducted from the income for tax purposes.

Now you need to do a tax calculation and return for each year the property was rented. A person can certainly do this themselves, though you may prefer to get an accountant to do it for you. (A financial advisor does something entirely different). It is impossible to say how much the tax bill will come to with knowing more of your circumstances.

Finally you will need to submit the tax returns to Revenue and pay the tax due.

There is a possibility of interest and penalties but if you come forward and pay the tax due, you will probably only be asked for the interest.

If you are unable to pay the amount due in one go, send in the returns anyway and pay what you can, with a proposal for paying off the remainder.

You should come back here for other opinions. But I certainly suggest getting on to the prtb website today.
 
Ferryman said:
I am outstanding for a big tax bill?
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You'll probably owe them a few grand. We can give you a decent estimate if we know:
- what other income you received during the 3/4 years (so we can figure tax brackets)
- what's the balance on the mortgage, and what's the interest rate (so we can allow for interest relief)
 
The main thing is that you are now holding your hands up. The next step is to regularise your position. Tax cheats are parasites, and you don't want to be tarred as such. Follow through with this.
 
trasneoir said:
You'll probably owe them a few grand. We can give you a decent estimate if we know:
- what other income you received during the 3/4 years (so we can figure tax brackets)
- what's the balance on the mortgage, and what's the interest rate (so we can allow for interest relief)
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Off the top of my head, €22,000 per year. Mortgage, €132,500 outstanding, can't put my hand to interest rate right now, but repayments are €960/month. Rental income €800/month. Should I get a tax advisor?
 
Agree 100% with Gordon Gekko,

definitely get a tax consultant to help you.

A tax consultant won't cost you a fortune, but might help save you a few bob. Also great to have someone who is used to dealing with the Revenue, completing tax returns etc. "on your side", to help guide you through the process when you are not familar with it.
 
Ferryman said:
Should I get a tax advisor?
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Yes.
Ferryman said:
Off the top of my head, €22,000 per year. Mortgage, €132,500 outstanding, can't put my hand to interest rate right now, but repayments are €960/month. Rental income €800/month.
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Not too bad - most (if not all) of your rental will attract income tax at 20% rather than 40%. Depending on what expenses you can account for, I think your liability will end up somewhere between 1100 and 1400 per year.
 
If you were getting mortgage interest relief at source on the basis of living in the property and didn't cancel it when you moved out you will owe that back to revenue too.
 
trasneoir said:
Yes.

Not too bad - most (if not all) of your rental will attract income tax at 20% rather than 40%. Depending on what expenses you can account for, I think your liability will end up somewhere between 1100 and 1400 per year.
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Many thanks - it's a ballpark, that's what I was looking for.
 
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