Is the €200 NPPR Local Authority charge a tax deductible expense?

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JoeRoberts

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The €200 paid to local authority - is it a deductible expense in computing taxable income on rented property? I guess it is not, but can't find anywhere that mentions it either way.
 
I checked this earlier and according to KPMG ( it was on their website) it is not deductible. Tax is not of itself a deduction against tax.
 
from taxireland website

Is the NPPR Charge tax deductible against my rental income?

A person in receipt of rental income is assessed to income tax on the net amount of the rents received, i.e. the gross rents less allowable expenses incurred in earning those rents. Only those expenses that are specified in the Tax Acts are allowable. The main deductible expenses are:
  • Any rent payable by the landlord in the case of a sub-lease;
  • The cost to the landlord of any goods provided or services rendered to a tenant;
  • The cost of maintenance, repairs, insurance and management of the property;
  • Interest on borrowed money used to purchase, improve or repair the property;
  • Payment of local authority rates.
Revenue and the Department of Finance have indicated that the payment of the NPPR charge for residential properties is not an allowable expense in computing taxable rental income as it is not included on the list of allowable items.
 
I would be interested in hearing from any one who has done more detailed research in to this - in particular whether the levy is to be considered a "rate" of a local authority.

I have already reviewed the post on the tax ireland website stating that Dept of Finance and Revenue consider it not to be tax deductible but am interested in talking to anyone who has looked at the definition of a "rate" in the regulations governing local authorities.
 
Am resurrecting this thread -and basically repeating the last post - to ask if there is any update on the question of NPPR being allowable or not?

Has anyone-or their accountants- written confirmation from Revenue that NPPR is not an allowable expence ??

the taxireland website is vague on this "..Revenue has indicated etc etc..."

Revenue may say -but I haven't found it yet in writing - that NPPR is not an allowable item as it doesn't come under Section97(2) of the TCA 1997 which lists various items that are allowed, including "local authority rates."

So, how come a NPPR charge not allowable ? Is it not the same as a "rate" ?

Despite my good English I'm having trouble differentiating tax from levy from charge from rates .

Are we too easily accepting that NPPR is not tax deductible ?
 
I deducted it. I'll et them tell me its not deductible if its not.
I sold nearly all of my properties and was thinking about getting back in now as price and yield landscape look good to me, but its things like this that put me off.
Property taxes that are not deductible. Random taxes slapped on whenever they feel like it. Fiddling with the interest deductible.
There is no stability for the investor at all from the government. You never know if you do invest in Ireland are you going to get taxed to death the following year.
 
minion said:
I deducted it. I'll et them tell me its not deductible if its not.
I sold nearly all of my properties and was thinking about getting back in now as price and yield landscape look good to me, but its things like this that put me off.
Property taxes that are not deductible. Random taxes slapped on whenever they feel like it. Fiddling with the interest deductible.
There is no stability for the investor at all from the government. You never know if you do invest in Ireland are you going to get taxed to death the following year.
Click to expand...

Yeah, put in an expression of doubt maybe. It is a joke though. Not to mention the rate of penalty accruing to the ridiculous nppr charge.
 
I'd suggest dont put the NPPR thing in any expression of doubt.

Don't ask - and if they do an audit and question it then you can reasonably state that you thought it was equivalent to a rate or levy as per the Revenue.ie guide to rental expenses.
There is still nothing yet on any official guide,and it seems reasonable to assume the PNNR is similar to a levy or rate which are allowable.

But am i that sure that revenue will accept what seems a logical view and actually ask them ? No.
 
Hi all, there's probably not much more to say in this thread other than what has been said before. But I too think its ridiculous that the NPPR would not be tax deductible.

The NPPR is a payment to the local authority and I don't really see how it differs much to rates. I suppose part of the problem is that there is isnt much info on how the NPPR is actually spent (basically because its presumably just extra cash for the local authority so the government can reduce the central budgets allocated to them and that's as far as it goes).

Should we be putting more pressure on for clarification as to what the NPPR tax is actually for? Is it specifically earmarked to cover certain extra costs that investment properties somehow uniquely create for the local authority? (Unlikely!) If we can get some specific clarification on what the NPPR is and why the Revenue/Dpt of Finance then feel that it is not the same as rates, that would be useful. I'd say they would firstly find it awkward trying to justify the NPPR/stating how it is used (because as far as I am concerned it is just a general tax raising measure and possibly discriminatory to owners of 2nd properties). Secondly, once it was clarified that it is just a general tax payment they may be in a difficult position trying to show that it is somehow different in nature to rates. My understanding of how rates payments are used is just to provide "a wide range of general services" (as taken from a City Council website). Fair enough if my understanding of what rates are used for and how they are accounted for is incorrect - someone might set me straight if so.

As has been said already, we are probably accepting the non-deductibility rule too easily and the problem will become more acute as the NPPR is inevitably increased over the years and it becomes a larger rental deduction that landlords are missing out on.
 
I would imagine it is not deductible,it is a pure tax,allowing property owners to offset it would make it revenue neutral?


I use a chartered accountant,he is none the wiser but includes in as misc expenses.


I find it incredible the Revenue have issued no guidance as on this matter,its not rocket science,either it is or it is not,people should not be second guessing on this matter.
 
Knuttell said:
I would imagine it is not deductible,it is a pure tax,allowing property owners to offset it would make it revenue neutral?
QUOTE]

But wouldn't you argue that rates are a "pure tax"? Rates are tax deductible expenses for businesses, so I'm not sure that idea would stand up.

And it wouldn't be Revenue neutral anyway as landlords only get tax relief on 20% or 41% of the amount. Its not like you pay €200 to the local authority and then revenue give you €200 back via your income tax return.
Click to expand...
 
I have raised this point several times including earlier in this thread.

I cannot understand how anyone thinks it is not claimable.
The only source that people quote when they say it is not claimable is a private accountancy company that says "Revenue have indicated...".

Well, according to Revenue's own leaflet IT70 ("Revenue guide to rental income")

" What expences are allowed......
- rates or levies payable on this property"

-------------
what expences are not allowed....

- several things, but no mention of NPPR.

I know that Revenue always say that the guidance leaflets are not definitive law. But surely in the guidance leaflet IT70 Revenue have "indicated" that NPPR is an allowable expence

=================

Here is an easy solution:-
If you think it is claimable, claim it. If not then don't claim it.
 
Both the Irish Taxation Institute and Chartered Accountants Ireland have been advised by Revenue that the NPPR charge is not deductible for tax purposes. This was communicated to the professional organisations at a Taxes Administration Liason Committee ("TALC") meeting.

Knuttell, I'd be concerned about the competence of your accountant if he's "none the wiser" regarding its deductibility.
 
Gekko - your comment on knuttels accountant seems harsh.

After all, the aforementioned Irish taxation Institute firmly believes that the NPRR should be an allowable expence -as per letter form the director of ITI to Revenue on 23 Sept 2010
" we consider that the NPRR charge should be deductible as a rental expence "

Whilst Revenue may hold a dissenting a view (as expressed by Eugene Creighton, Asst sec Income and Capiotal Taxation,Revenue) in his reply to ITI on 18 Oct 2010, it is not a view that has been made public by Revenue.

It would seem unreasonable for private landlords to have to refer to correspondence or meetings (e.g TALC)between Revenue and accountants.

Until Revenue makes the position clear and public then landlords can decide for themselves whether to declare NPPR as an expence.
If they do get it wrong what's the worse that can happen ? Revenue will just disallow it.
 
-sorry to go on. I forgot...

In Revenue's reply to ITI (October -six months ago) Revenue promised that they would soon issue a "tax briefing" on NPPR.

I can't seem to find this. Any help appreciated.
 
oldnick said:
Gekko - your comment on knuttels accountant seems harsh.

After all, the aforementioned Irish taxation Institute firmly believes that the NPRR should be an allowable expence -as per letter form the director of ITI to Revenue on 23 Sept 2010
" we consider that the NPRR charge should be deductible as a rental expence "

Whilst Revenue may hold a dissenting a view (as expressed by Eugene Creighton, Asst sec Income and Capiotal Taxation,Revenue) in his reply to ITI on 18 Oct 2010, it is not a view that has been made public by Revenue.

It would seem unreasonable for private landlords to have to refer to correspondence or meetings (e.g TALC)between Revenue and accountants.

Until Revenue makes the position clear and public then landlords can decide for themselves whether to declare NPPR as an expence.
If they do get it wrong what's the worse that can happen ? Revenue will just disallow it.
Click to expand...

It's a self assessment system so landlords are free to do what they like. Whether their actions are correct though is a different matter entirely. Tax professionals do not include the NPPR charge as an allowable expense because as things stand it is not an allowable expense.

Joe Public doesn't really have to refer to TALC meetings - If you Google "NPPR+charge+deductible", the query's answered.

The worst that can happen is that Revenue form the view that the taxpayer may be taking an equally cavalier attitude in other areas and subject him or her to an audit. For the sake of at most €110, what's the point of disputing the issue?

As for my comments in relation to Knuttel's accountant, I don't believe that I was harsh. The accountant is including the NPPR charge in the taxable rental income calculation. That's incorrect and worrying in my view.
 
gekko- I understand what you say and your points are valid ,but having several properties then declaring this as an expence could save me nearly a grand a year ,more in future with probable increases.

I'm convinced that Revenue are a bit iffy themselves on this. Would love to see their long promised tax briefing. I'd also love to know if anyone has had an audit ,declared NPPR, and had Revenue dispute it in writing.
 
Thanks for the detailed info re correpondence between the Irish Tax Institute and Revenue guys. Good to know a tax briefing may be coming along at some point. Hopefully sooner rather than later and hopefully it will be a bit more detailed than their previous "indications"! I really hope Revenue back down on this - as oldnick says, it adds up when you have a few properties and like I said myself also, the chances are it'll only increase over the years so the potential tax savings will really start to add up.
 
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