Rental Income Tax Minus Interest As An Expense?

S

SMcDDB

Guest
Hi,

In October this year, I will have to pay tax due on rental income which I have acquired from renting out a property I own in Donegal. I know that as the lease began in August 2007, I will be liable for five months tax to be paid this October 2008. My question is when calculating my deductible expenses, is it true that I can include interest I pay monthly on borrowings used for the purchase of the rental property?

I am registered with the PRTB but Not all of the money borrowed on the house went to it's purchase, some went to the purchase of my primary home in Dublin.

Also, when it comes to deducting expenses such as house insurance, I have the physical evidence of this but such things as the refuse expenses and a new cooker - I may not be able to locate the physical evidence of these expenses, so does that mean they have to be totally left out?

I have become much more prudent about the safekeeping of documents and filing etc in 2008!

Any advice would be much appreciated.

Thanks.
 
is it true that I can include interest I pay monthly on borrowings used for the purchase of the rental property?
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Yes you can - but only the part used to purchase the rental property - you will need to deduct the portion you attributed to the other property.

but such things as the refuse expenses and a new cooker - I may not be able to locate the physical evidence of these expenses, so does that mean they have to be totally left out?
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Not necessarily, do you have any cheque stubs or credit card statements. Obviously the more reciepts you have the better (all being best!!) but lets say you got the boiler serviced and paid cash but lost the reciept : you could prove you got the service done if needed sa there would be a service sticker on the boiler with a date & a reasonable amount could be deducted.

A very organised friend has a separate current a/c for his rental property and writes a cheque for all of the expenses. That way he has a record and can prove who the money was paid to.
 
While I would not consider myself the most organised person in the world I have always kept a seperate bank account for rental property. Therefore all transactions invloved with that property only are clearly recorded. It simplifies things for me and hopefully would do the same in the event of a revenue audit.
As I am not an accountant and do my own returns I feel I must use all the tools that minimize the paperwork
 
Thanks Sam H and Black Sheep.

Yes a different rental bank account is a good idea. I'm going to get on to it straight away as it has not been a year since I started renting so I can really have everything sorted and the kinks ironed out before lease renewal issues start to arise.

Thanks for all the advice guys :)
 
I find that paying expenses where possible by laser card the best solution as opposed to writing a cheque.

A narrative appears on the bank statement such as PRTB or XYZ Furniture etc.. and makes the whole accounting/tax procedure very easy and quite transparent...
 
Does a tax return need to be done on the aniversary of the rental or is it an anual thing at a particular time of year?

Do revenue chase me or is it on me to get organised and send a return to them?

I rented a place almost a year ago, looked like it wouldn's sell too easy at the time.

Thanks for advice.
 
Frank said:
Does a tax return need to be done on the aniversary of the rental or is it an anual thing at a particular time of year?
Do revenue chase me or is it on me to get organised and send a return to them?
I rented a place almost a year ago, looked like it wouldn's sell too easy at the time.
Thanks for advice.
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The tax year runs in line with the calendar year so if you rented your property out a year ago any tax on your income up to 31 Dec 2007 will be due with your 2007 return, which must be submitted by 31st Oct 2008.
It is your responsibility to submit a tax return and any tax due. Note that you must be registered with the prtb to claim mortgage interest as an expense.
 
SMcDDB said:
Hi,

In October this year, I will have to pay tax due on rental income which I have acquired from renting out a property I own in Donegal. I know that as the lease began in August 2007, I will be liable for five months tax to be paid this October 2008. My question is when calculating my deductible expenses, is it true that I can include interest I pay monthly on borrowings used for the purchase of the rental property?

I am registered with the PRTB but Not all of the money borrowed on the house went to it's purchase, some went to the purchase of my primary home in Dublin.

Also, when it comes to deducting expenses such as house insurance, I have the physical evidence of this but such things as the refuse expenses and a new cooker - I may not be able to locate the physical evidence of these expenses, so does that mean they have to be totally left out?

I have become much more prudent about the safekeeping of documents and filing etc in 2008!

Any advice would be much appreciated.

Thanks.
Click to expand...


If the lease for the rented property started in August last year, I think you were due to pay pre-tax by 31st Oct of last year and the balance August this year. N.B.this thread......
http://www.askaboutmoney.com/showthread.php?t=78143&highlight=pre+tax

Forgive me if I have still not quite got to grips with pre-tax yet !!!!
 
landlord said:
If the lease for the rented property started in August last year, I think you were due to pay pre-tax by 31st Oct of last year and the balance August this year. N.B.this thread......
http://www.askaboutmoney.com/showthread.php?t=78143&highlight=pre+tax

Forgive me if I have still not quite got to grips with pre-tax yet !!!!
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As it is the first year of rental no preliminary tax will have to be paid and the full 2007 tax charge and return are due by 31st Oct 08.
Prelim tax for 2008 will be payable on 31st Oct 2008.
 
webtax said:
As it is the first year of rental no preliminary tax will have to be paid and the full 2007 tax charge and return are due by 31st Oct 08.
Prelim tax for 2008 will be payable on 31st Oct 2008.
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Always seems crazy to me that you have to pay pre-tax for a financial year, before that year has finished, i.e. before you have received your total income for that year. ah well....
 
landlord said:
Always seems crazy to me that you have to pay pre-tax for a financial year, before that year has finished, i.e. before you have received your total income for that year. ah well....
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Not always the case. My financial year runs to 31 August. For the tax year 2008 I'll be paying PT tax in October 2008, some 2 months after my year end. If my year end was 31 January , I'd have 9 months credit before paying PT.
 
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