Rental of house for non-resident

P

pizzzaguy

Guest
I currently live in the US and bought a house in Ireland in Summer '06 which I am renting - and I have a few questions ...

1. I have an interest only mortgage and because of the raise in interest rates, the rent is no longer covering even the interest part of the mortgage. When I go to pay my taxes for 2006 next year, how will this loss be treated? Since I am making no profit what-so-ever will it always just roll over to the next year as loss to offset against any future profit(s)??

2. If I sell the house in a few years, will I be able to offset this loss against any Capital Gains Tax at all?

3. I see in a revenue leaflet that they say ..
"If a landlord resides outside the country and rent is paid directly to him/her or to his/her bank account either in the State or abroad, tax must be deducted by the tenant at the standard rate of tax (currently 20%) from the gross rents payable"

Can someone explain to me why this is neccessary? Since I am not making a profit on the rent does my tenant still need to do this?
 
Hi Pizzaguy,

In relation to the above:
1 Yes
2 No
3 Just in case you had a liability - I do not know how the Revenue enforce this legislation as to non residents owing Irish property. It is the tenant who is liable to pay this withholding not you.
 
Tenants of non resident landlords are obliged to deduct the tax, and submit to revenue. If however you have a irish resident collecting agent, there is no requirement for this to be deducted. Where there is a irish registered collecting agent, the Revenue allocate a seperated PPS number to them and the tax return is submitted under this number. The Revenue system linkes this number to the PPS number of the tax payer, i.e. you.

No idea what happens in such cases where tax is being deducted by tenants and paid over to revenue but the computation deems a loss therefore no tax liability. I presume a refund would be due, never came accross this situation before.
 
Just to add a quick point here -
Most individuals do not know that they must withold tax from rent to an overseas landlord.
This usually comes to light when they go to claim tax relief on rent paid - there is a question for this on the Rent 1 Form.
In the event of non-compliance by the overseas individual the tenant is responsible for the tax to the Revenue.
I have never seen this happen in practice, but it would not be a good idea to put this lon your tenants, so best comply....
 
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