Questions on rental tax

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pachanga

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Please bear with me, this is a bit long

I bought a property in 2004 and was supposed to move in with gf. We split up just after I signed for the house so I decided to rent it out. My first tenant moved in Jan 2005 and I've had tenants in ever since.

I completed a form 11 last year declaring the house for tax for 2005 but didnt hear anything back from the tax office. I thought this was strange but thought they would adjust my credits or something like that.

Now the time has come around where I am thinking about sending in a form 11 for 2006 so today I rang the tax office to find out whats going on with 2005's form 11. They told be they received it but it hasnt been processed, and that I wasnt registered with them. I didnt know I had to do this but I thought it strange that they didnt contact me. Also, they only have page 1 of my form 11 scanned in on their system and the guy asked me to resend 2005's form 11. So somewhere along the lines they lost the rest of my form.

Anyway, the guy registered me and told me it should be ok and I shouldnt get a penalty for 2005 (I hope not, as they lost the forms and didnt inform me).

Now for my questions,

1. does it seem strange or is it normal that they didnt contact me? Ok I shouldnt of left it a year to get back to them but how and ever.

2. I am going to go to an accountant before filling it in again as this time I dont want anything wrong on it. But to get it clear in my head, Im aware of the different deductions I can mark off it, like insurance, wear and tear, management fees etc but can someone explain can I or how can I claim interest relief when Im renting it out ?? I thought this doesnt apply when you are renting out property ? How do I calculate this ?? I never filled out a TRS1 for the bank in the beginning, should I of had??

3. Even though I was a FTB I never lived in the house, I am liable for stamp duty clawback, I only recently found this out. Should I be paying this now or when I sell it ? Am i in trouble for not informing the tax office sooner that I never lived in it ? Should I tell them now or is it ok until I sell it ? Does anyone know how much I am liable for ?

Please go easy on me, its my first post, I just want to get it sorted and be up to date with my payments.

thanks
 
pachanga said:
I completed a form 11 last year declaring the house for tax for 2005 but didnt hear anything back from the tax office. I thought this was strange but thought they would adjust my credits or something like that.

Now the time has come around where I am thinking about sending in a form 11 for 2006 so today I rang the tax office to find out whats going on with 2005's form 11. They told be they received it but it hasnt been processed, and that I wasnt registered with them. I didnt know I had to do this but I thought it strange that they didnt contact me. Also, they only have page 1 of my form 11 scanned in on their system and the guy asked me to resend 2005's form 11. So somewhere along the lines they lost the rest of my form.
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Is the problem that you weren't registered with the PRTB perhaps? Or maybe you weren't registered for self assessment with Revenue? It's not clear to me. You should probably get independent, professional tax advice on this matter.
2. I am going to go to an accountant before filling it in again as this time I dont want anything wrong on it. But to get it clear in my head, Im aware of the different deductions I can mark off it, like insurance, wear and tear, management fees etc but can someone explain can I or how can I claim interest relief when Im renting it out ?? I thought this doesnt apply when you are renting out property ? How do I calculate this ?? I never filled out a TRS1 for the bank in the beginning, should I of had??
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You should not be claiming owner occupier mortgage interest relief on a mortgage used to purchase a rental property. If you have been obtaining this then you need to stop it now and repay any relief obtained to date. You can instead offset mortgage interest against rental income as an allowable expense.
3. Even though I was a FTB I never lived in the house, I am liable for stamp duty clawback, I only recently found this out. Should I be paying this now or when I sell it ? Am i in trouble for not informing the tax office sooner that I never lived in it ? Should I tell them now or is it ok until I sell it ? Does anyone know how much I am liable for ?
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You were liable for the SD clawback at the time the property was first rented out. It's not that long ago so you might be alright by coming clean now. However you might want to get independent, professional advice before approaching Revenue directly. Your original liability is the SD that an investor would have paid on the same purchase.
 
Thanks for your response Clubman

I am registered with PRTB. But revenue didnt know I had a house. I wasnt trying to hide it, seriously didnt know I had to inform them. I thought by sending in the form that would be ok.

I never filled in a TRS1 form when the mortgage started so therefore I dont think I am claiming owner occupier mortgage interest relief. I will have to check this with the Mortgage company.

Clubman you say

"instead offset mortgage interest against rental income as an allowable expense."

How do I do this or calculate this??

I will seek Independent advice on the SD clawback issue.

thanks for the advice. I genuinely am very ignorant on alot of this and in no way want to evade paying tax. I am seeing an Independent advisor at the weekend but I just want to be clear of some of this stuff before I go to him

thanks
 
pachanga said:
"instead offset mortgage interest against rental income as an allowable expense."

How do I do this or calculate this??
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Your (annual) statements should itemise the interest payable and this amount can be set against rental income when calculating your rental income tax liability. You can estimate the interest payable by entering your mortgage details into Karl Jeacle's mortgage calculator.
I will seek Independent advice on the SD clawback issue.
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And the rest presumably?
 
thanks Clubman

yes and definetly the rest

Do you think I could be in a lot of trouble hear penalty wise??
 
You should not be in for any interest or penalties on your Income Tax as you get one year of grace for preliminary tax but your stamp duty is another matter, you may be hit for interest but your penalty should not be too heavy if not at all.
 
eggnog said:
you may be hit for interest but your penalty should not be too heavy if not at all.
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It depends on the circumstances as to how much stamp duty is due. I wouldn't be too sure on the penalty. This is an area that Revenue are targetting so I would be paying this ASAP. Get advice from a tax advisor before you do so.
 
Thanks for that link Newby, I'll be seeing an advisor at the end of the week and contacting Revenue first thing next monday.

Although this sounds very naive on my part, I genuinely was not trying to evade this. I didnt know. And have no problem paying this (and or a fine) to get it sorted.
 
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