In fairness to the agent, how are they expected to know the tax residency of their landlord clients?? Having a contact address in Ireland proves nothing about tax residency. They could easily fall foul of this ridiculous law if it turns out a landlord was non-resident after all. So, deduct 20% from all and cover their rear ends. I have to laugh.
Non-Resident Landlord Withholding Tax reforms
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T McGibney
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Er, it's all to do with residency, not tax residency, and knowing and maintaining a record of all customers' addresses is a basic prerequisite of anti-money laundering legislation, to which estate and letting agents are subject.
And on top of that, I'd suggest that to take it upon oneself to force the deduction at source of a notional tax sum attributable to a debt owing to a customer, without having a lawful basis for so doing, could be seen as tantamount to fraud
So keep laughing. Or perhaps learn a bit about a subject before you do.
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NoRegretsCoyote
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An Irish address means very little - it could be that of a family member or friend. Most letting agents deal with their clients remotely via phone or email and residency can change without them knowing.
Otherwise you are right about AML legislation but the risk is more for sales than property management and most letting agents should not do more than verify the identity of the client and proof that he is the beneficial owner of the property.
I still think it’s absurd for a service provider go be expected to know a client’s whereabouts with any degree of certainty.
Ah take it easy Tommy. I'm laughing because this hames of a new regime (as bad as the old one) is now causing waves for everyone using an agent, not just NRLs like myself. Welcome to the club I say.
Good piece in the Irish Times today about the new system. There is also a useful tax and duty manual on the new system on Revenue's website which is like a step by step guide to making returns.
Main downside of this new system is having to pay 20% of gross rental income each month to the Revenue. In our case, a single BTL on a tracker mortgage, the rental income just covers the mortgage and we have always had to pay the income tax arising on the rental income from our own after tax means each year. We also pay 100% preliminary income tax each year. Rents are now legally capped at 2% so our rental income will never vary hugely from year to year.
So still unsure why revenue now need me to also pay them 20% tax on gross rental income upfront. This means NRL in similar situations will have to tie up a lot of their personal cash flow into Revenue just to facilitate this new reporting system in 2023.
Luckily my family are relocating to Ireland in the next few weeks and an unexpected benefit is that we hope to escape this system soon.
Main downside of this new system is having to pay 20% of gross rental income each month to the Revenue. In our case, a single BTL on a tracker mortgage, the rental income just covers the mortgage and we have always had to pay the income tax arising on the rental income from our own after tax means each year. We also pay 100% preliminary income tax each year. Rents are now legally capped at 2% so our rental income will never vary hugely from year to year.
So still unsure why revenue now need me to also pay them 20% tax on gross rental income upfront. This means NRL in similar situations will have to tie up a lot of their personal cash flow into Revenue just to facilitate this new reporting system in 2023.
Luckily my family are relocating to Ireland in the next few weeks and an unexpected benefit is that we hope to escape this system soon.
Hello not sure if this is the best place to ask apologies if not: re the NRWT; i followed the guidelines and implemented the new regime of requesting my tenants pay me 80% and pay the remaining 20% directly to Revenue, since last July. however other than 1 payment from a tenant who has since left, i don't see any other RN, i don't think the tenants have done them yet. What are the best ways to move forward on this? i recently sent yet another strongly worded email asking them to declare/ pay the RNs asap but i'd like to know if there is anything else i should be doing? ( i reached out to revenue as well to ask them for advice but no response so far)
thanks
thanks
What is this exactly? I sold property in Ireland and did not have a No Audit thing? I did have a Tax Compliance Cert though.
T McGibney
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The Capital Gains Tax ‘Letter of No Audit’ for Non-Irish Residents
If you’re non-Irish resident, and selling a property here, there is a special rule relating to Capital Gains Tax that you will need to watch very carefully. In short, your solicitor is prohibited f…
mcgibney.ie
Well that's very weird. Neither my solicitor nor my accountant mentioned anything about that. As it happens I sold two properties. But I did the CGT return and paid the tax last year. The proceeds of sale were presumably paid to the purchasers. So that's 3 sets of solicitors.
This bit:The Capital Gains Tax ‘Letter of No Audit’ for Non-Irish Residents
If you’re non-Irish resident, and selling a property here, there is a special rule relating to Capital Gains Tax that you will need to watch very carefully. In short, your solicitor is prohibited f…
It also means that a Revenue official is almost certainly going to personally review your Return, so you will need to provide them with sufficiently strong supporting computations and documents to ensure that there shouldn’t be any hiccups in their issuing the Letter.
Obviously, well I think obviously, that the return was done way after the sale, can't remember the deadline but I see I had to pay the CGT by December and the CGT return was done in November. You'll know the dates better than me.
In the middle of it I got new Tax Clearance Certs as well. Because of doing the Rental Income tax just before, also in November. But there is zero about Tax Audit. re non residents.
T McGibney
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Sorry I haven't the first clue of whatever point you're wishing to make here.
When did you sell the property?
Are you non-resident?
Did your solicitor not retain the proceeds until you were issued with a Letter of No Audit?
Sold 2 properties. Last year. So I'm the vendor.
Yes non resident.
Nothing was held back by anyone. I got full proceeds etc.
Afterwards I did the CGT return.
There is no way on earth a landlord could rely on a tenant to pay tax for them. Did you not check monthly the tenant had paid the 20%? I strongly suspect the tenant pocketed the money, and you'll still be liable to revenue.
And you can forget revenue being able to help you.
T McGibney
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Sounds like your solicitor messed up, left themselves wide open to liability to Revenue for your tax bill had you not paid it, and probably broke the law too.
Well maybe Revenue will still audit me. It's entirely possible is it not. I do have documentation but not for everything. But I like your wording;
sufficiently strong supporting computations
So I'll use that with my accountant if it comes up. We did run thru everything to see if it was 'sufficiently strong'.
T McGibney
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They'll only audit you if they consider there's a significant undischarged tax liability associated with your disposal.
If they have any concerns about your CGT return, a non-audit intervention is vastly more likely.
Not concerned, I 'luckily' had a loss to offset the gain so it actually worked out very neatly and only had to pay a few grand in CGT. Good thing both properties were sold in the same tax year. Now I am no longer am concerned about the RPZ or trying to get older properties to comply with all the rules and regulations. My main motivations for selling.
The withholding tax scenario is now a new concern if I go back into the rental market. But in my case, and to reassure others, I already had that issue as the HAP was withholding the 20% and it worked out great, as it meant when doing tax returns that the revenue already had the money so it didn't feel like a big amount annually when the tax returns were done.
I shall not avail of tenants paying my tax in any way.
Hi thanks for the reply sorry i didn't see it sooner. I dont really understand your first point; the whole point of the NRWT is that the tenant is supposed to pay 20% of rent directly to the taxman, right? with regards to what has actually happened, we will see anyway both tenants have assured me they will regularize in the next short while... we will see
it was a lot easier and cleaner before when i just received all the rent and paid my full taxes annually. . I did get a reply from revenue which was informative if not particularly helpful
: it is my responsibility to get the tenants to pay , if I cannot do it then I have to get a collection agent ; here is the full response:... so in fact my question perhaps is this; can i act as my own collection agent, i.e. i get the tenants to pay me 100% ( at least moving forward) and then I can do the RN on their behalf? it all seems so bloody stupid.
thanks
Quick update, after a fair bit of cajoling i got the tenants to declare their RNs, we are now nearly up to to date . Does anyone know if it possible for me to do the RNs myself on their behalf, moving forward? I'd just collect all rent, and then do the declarations and payments on their behalf ; like a collection agent I guess?
Well they have the title deeds to another property so I'm sure they are not worried.