Non Resident Lanlord - Paying tax on rent

H

homelet

Guest
As a Non Resident landlord (based in UK), I have two choices with regard to paying tax on the rent:

Option 1. ask my tenant to deduct 20% tax before they pay rent into my account and pass the 20% to revenue

Option 2. I appoint an Irish based agent to collect the full rent who then submits a tax return for me.

Option 1 sounds like too much hassle for the tenant
as why should they have to do this, so I'm going for option 2.

Are there any non-resident landlords out there in a similar situation with experience of this. Can anyone recommend an agent/accountant who could do this ?
Thanks.
 
Tax

I don't think they are two distinct "choices".

If you don't have an Irish agent, the tenant is OBLIGED to withhold tax. You would still have to file an Irish income tax return but will get a credit for the tax withheld by the tenant.
 
.

Hi- We have a house rented out in Ireland and are living in America . We moved in year 2000 and did tax returns in both Ireland and U.S. for this year . Since then I've just turned in taxes for the U.S. and showed the rental income from the house in Ireland as well as claiming deductions.. I didn't think there was anything additional to do but it sounds like there may be . Does anyone know if I should have been providing tax returns in Ireland also ? I haven't set up an agent but a relative does handle some of the items for us . Anyone got any info or experience around this . I want to make sure we're doing everything ok around this ..
 
Tax on rental income

The revenue sent me a letter with the following contents:

"As you are not resident in this state (ireland), there are two methods of dealing with any Income Tax liability arising on the rental income

SECTION 1034 consolidation Act 1997
You may appoint an agent who is residing in this state to act on your behalf for the purposes of administering taxation matters relating to the let property in this country. S/He is obliged to submit the necessary returns to satisy any liability arising.

OR

SECTION 1041 Consolodation Act 1997
Where the is no agent acting on behalf of a non-resident landlord, the tenants are obliged to deduct Income Tax on the gross amount of rent and remit this tax to the Collector General. The standard rate is currently 20%.
"

I dont want to lumber a tenant with the duties of deducting tax and sending it to the revenue.

To avoid this I need to find an agent/accountant who will collect the rent via direct debit from the tenant and also submit my annual tax return and pay the tax liability to the revenue.

I have spoken to a number of agents/accountants but they are not interested in doing this.
I would have thought there were a lot of non resident landlords and hence this would be good business for accountants.
 
Do you have to inform the tenant ?

This one has been up before, but as I understand it, you are not obliged to appoint an agent to collect it on your behalf, nor or you obliged to inform the tenant of their responsibility in collecting the tax and remitting it to the revenue.

So as a non resident landlord you can technically leave the tax liability with your tenants. Are the revenue seriuosly going to chase tenant for a tax liability the tenant had no knowledge of ?

Not condoning tax evasion here, but there seems to be a bit of a flaw in this set up.
 
Re: Do you have to inform the tenant ?

you are not obliged to appoint an agent to collect it on your behalf,
Click to expand...

This isn't correct. While Revenue will (presumably) tolerate any existing situation where tenants deduct and pay over tax, in other cases (eg new rentals) they insist invariably on the appointment of a collection agent. If in doubt, contact any tax office and they will confirm this.

Homelet,
Very few accountancy practices in this country are authorised to handle clients money, mainly due the cost of professional indemnity insurance for this type of work. Most firms with experience of helping clients in the property rental sector will be able to advise you on how best to manage the regulations.
 
Re: Do you have to inform the tenant ?

Are the revenue seriously going to chase tenant for a tax liability the tenant had no knowledge of
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Yes, because it happened to me a few years ago. I claimed tax relief on my rent and because the landlord had an overseas address, the Revenue came looking for the tax at the end of the year. After much pleading, they let it go. It was the first time I had even heard of a tenant's liability to deduct tax in this fashion, and I suspect that very few tenants would be aware of their obligation.
 
Re: Non Resident Landlord - Paying tax on rent

The Revenue Commissioners have set out a rotten carrot with an enormous stick in the form of rent relief (Rent-1).<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->The non-resident landlord gets reported (PPS and address) and the burden is placed upon the tenant (actually it is quite simple if they are PAYE taxpayers). And the Revenue Commissioners get all this for €254 per year!?!<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->NB. Using a collecting agent spotlights yet another individual's financial affairs (ménage à troi?).
 
Re: Non Resident Landlord - Paying tax on rent

NB. Using a collecting agent spotlights yet another individual's financial affairs (ménage à troi?).
Click to expand...

Not correct - if a person is registered with the Revenue in an agency capacity (eg as agents for someone else) their tax affairs arising from the agency are dealt with on a totally separate basis from those arising from the person's other income or business affairs, ie there will be totally separate tax returns, assessments etc for the agency (and for each, if more than one agency is carried on) and for the remainder.
 
Recommend an agency

I'd be very grateful if anyone can recommend an agency that is up to speed with this process,

I've contacted a few but they are not familiar with this. One agent is willing to find out from the revenue how to do this, but I'd like to use an agency that is already has experience with this.
 
Re: Non Resident Landlord - Paying tax on rent

, the NB was to inform readers that the details of the collecting agent are submitted with the RENT-1 form. If a Form-12 is not forthcoming from the collecting agent for the non-resident landlord, the Revenue Commissioners know who to call around to for a quiet chat.
 
Did anyone ever manage to resolve this one ? Like many others, as a non-resident landlord, I would like to meet my tax liabilities, but just can't find anyone to help out with this. My house has been rented for two years by a family in receipt of social welfare, thus most of the rent is paid directly by DSW. I wonder if they could deduct at source ?
 
Where the tenant is paying the nonresident landlord direct, ie. generally direct debit into a bank account in the name of the landlord, the tenant is obliged to deduct tax at standard rate, the tenant then gives the landlord a form R185 which details the tax deducted. The tenant is obliged to return this tax to the Revenue. The non resident landlord is obliged to make a tax return is this country. Where a collecting agent is apointed and they are based in Ireland, they are not obliged to deduct tax but should in theory deduct sufficient to pay any liability, this is the Revenue statement on this however I have been told verbally that the collecting agent is obliged to, but this is not written as far as I can find. The collecting agent is issued with a seperate PPS number in the name of the landlord for the purpose of tax returns.
 
I have just returned from a two year stint abroad. rented house at home and didn't ask tenant to withhold 20% or appoint a collection agent. Simply declared rent received in annual tax return. received balancing statement with amount due but no interest or penalities levied.

While I may not have complied strictly to rules, Revenue seem to be practical in its application particularly if Irish tax return is completed within specificed timeframes.
 
If a landlord owns property in the U.K, but lives outside the U.K, they can apply to the Inland Revenue using a standard form available on their web-site, to have the rent paid without the tenant having to withold the tax. The landord undertakes to fill in a self-assessment form, but does not have to engage an agent to act on their behalf. It looks like there is no equivalent system in Ireland? Makes me think about setting myself up as an agent for all the overseas landlords worrying about their legal/tax obligations in Ireland. Anybody interested in having an agent work on their behalf?
 
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