Selling rented property. No tax paid on rent.

[Knuttell]

As per Brendans post if you weren't registered for RTB you can't write off interest...however you can register the tenancy now and pay the late fee and then you can write off interest.

 

[fiftrix]

Have you kept receipts and interest certs over last 5 years? The interest certificates will help a lot as it sounds like there was a hefty mortgage.

If you haven't got them get on to the bank and see if they will reissue (there will be a cost on this I'd imagine).

Don't get to wound up on this until you know exactly where your stand.

My old boss used to say an elephant is eaten one bite at a time and he was right.

I can PM you the number of an accountant in Bray who's very good....if you like.

Thank you so much for all your kind replies. And yes, an elephant IS eaten one bite at a time. So true

I was panicking but there is no point. Better just get on with the job in hand. I have most receipts or else the letting company will have them. And I will contact the bank too. All great advice.

My best friend is an accountant and she said she will help me. She told me all the same stuff you did, so you know your stuff! But thank you for the offer of a number.

And thanks to anyone else who ripped in with replies. Much appreciated.

 

[fiftrix]

There is a good summary here

Late Income Tax Return Ireland - Consequences Of Missed Deadline

Learn what to do if you are late filing the income tax return in Ireland, whether you're a first-time filer or you have missed the deadline.

kinore.com

I am not a tax practitioner, but this is my understanding

Not sure if the €12k is the rent or the rental profit after interest and expenses.

If you were registered with the RTB then you get a deduction for the interest you paid. I assume you were.

1) The tax due
if you had €12k rental income and €4k interest, the profit would be €8k a year , the tax would be €4k

So 5 years = €20k

2) You will pay 10% of your liability for making the returns late.

So, so the penalty for late returns would be €400 x 5 years or €2,000

2) The interest is 10% a year, so roughly

€ 4k @10% = €400 for 5 years = €2,000
€400 for 4 years = €1,600
€400 for 3 years = €1,200
€400 for 2 years = €800
€400 for 1 year = €400.
Total interest: €6,000

That's brilliant. Thanks so much. Yes I am with the PTRB. I'll get it sorted. Thanks for you help.

 

[T McGibney]

There is a good summary here

Late Income Tax Return Ireland - Consequences Of Missed Deadline

Learn what to do if you are late filing the income tax return in Ireland, whether you're a first-time filer or you have missed the deadline.

kinore.com

I am not a tax practitioner, but this is my understanding

Not sure if the €12k is the rent or the rental profit after interest and expenses.

If you were registered with the RTB then you get a deduction for the interest you paid. I assume you were.

1) The tax due
if you had €12k rental income and €4k interest, the profit would be €8k a year , the tax would be €4k

So 5 years = €20k

2) You will pay 10% of your liability for making the returns late.

So, so the penalty for late returns would be €400 x 5 years or €2,000

2) The interest is 10% a year, so roughly

€ 4k @10% = €400 for 5 years = €2,000
€400 for 4 years = €1,600
€400 for 3 years = €1,200
€400 for 2 years = €800
€400 for 1 year = €400.
Total interest: €6,000

Hi Brendan

There's a fair bit of scaremongering in that article. "Increased risk of a Revenue audit" is one example.

In almost all arrears cases I've seen and assisted in having resolved, the taxpayer has ended up pleasantly surprised that the process wasn't as bad as they had expected at the outset.

 

[Bronte]

Hi all,

So I went to look into getting a mortgage today and all was going well until I mentioned I hadn't paid any tax on my rented property (the property i own and am renting out). I was basically told I wouldn't get a mortgage without the proof that I had.

So my question is....why is this any of the bank's concern? Sure, I should have done so, but shouldn't the bank be mostly concerned with my capacity to service my new mortgage?

I will obviously pay the tax ( I just REALLY couldn't afford to when I started renting it, then just forgot basically) but I'm wondering why the bank's need this to be done and if there is a way around this until I get fixed up with Revenue as I'm anxious to get the ball rolling.

I'm sure I'm not the first in this position but the assessor I spoke to reacted like I'd committed world atrocities lol.

Goodness me this is a rather cavalier attitude to so many things.

Your first mistake was telling the bank what you were at, and your second mistake was thinking any of us believe you 'forgot' to pay taxes.

Clearly you seem to own a property. I suppose your not paying property tax either? How long have you owned this property. Do you own it without a mortgage.

And what exactly is it you need a mortgage for?

I'd imagine the bank might, just might be concerned about your attitude to taxes, your lack of a tax clearance certificate, your back taxes, your interest on taxes, penalties on the taxes and interest ................ Now is such a person a good solid citizen who will pay their mortgage diligently. LOL (to use your parlance)

 

[Bronte]

Curious as to how this came up, I've gotten mortgages and remortgages quite a few times and never been asked for tax clearance cert.

In the past they did not ask, and during the Celtic Tiger they actually didn't want to know. But they are much stricter now. One of our mortgages was a property loan and every year I had to state my tax affairs were in order, not sure if they asked for a tax clearance cert. But I did need it for HAP.

 

[Bronte]

Thank you so much for all your kind replies. And yes, an elephant IS eaten one bite at a time. So true

I was panicking but there is no point. Better just get on with the job in hand. I have most receipts or else the letting company will have them. And I will contact the bank too. All great advice.

My best friend is an accountant and she said she will help me. She told me all the same stuff you did, so you know your stuff! But thank you for the offer of a number.

And thanks to anyone else who ripped in with replies. Much appreciated.

The letting agency costs are also a deduction. The more expenses you have the better.

Not sure about using a friend, instead of paying a professional. Someone who does this for a living. Does your friend know this involves 5 tax years.

There is no way you should be looking for a mortgage until you've sorted out your taxes. Also why is the rent static? Have you never increased it?

 

[T McGibney]

Not sure about using a friend, instead of paying a professional. Someone who does this for a living. Does your friend know this involves 5 tax years.

Well said.

I mentioned scaremongering above but the other side of this problem is that if it's mishandled, the OP could end up being criminally prosecuted.

If I were them, I'd steer clear of friends and get the best advice they can muster.

This is not a time for messing around.

 

[Bronte]

Well said.

I mentioned scaremongering above but the other side of this problem is that if it's mishandled, the OP could end up being criminally prosecuted.

If I were them, I'd steer clear of friends and get the best advice they can muster.

This is not a time for messing around.

Not only that, you shouldn't expect friends to do professional work for free. Plus as you said this is serious. You want to have everything correct from the get go of contacting revenue. The friend has no skin in the game if they are 'helping out'. And based on the OP's details so far (no receipts) this is a mess and worse not a mere fixing of one tax year.

They are actually lucky the bank refused them. So they get this sorted now before it ends up 10 or 20 years down the line.

 

[elcato]

Important to remember as well is that you are only 3 years in arrears for the tax liability as 2023 is not due to Oct this year, assuming your 5 years is accurate. Your liabilty is not huge but as advised by good contributors above, use a professional and let them contact and deal with revenue (Their fees are tax-deductable)

 

[fiftrix]

Important to remember as well is that you are only 3 years in arrears for the tax liability as 2023 is not due to Oct this year, assuming your 5 years is accurate. Your liabilty is not huge but as advised by good contributors above, use a professional and let them contact and deal with revenue (Their fees are tax-deductable)

Thank you so much. That makes things feel a little less scary.

 

[fiftrix]

Not only that, you shouldn't expect friends to do professional work for free. Plus as you said this is serious. You want to have everything correct from the get go of contacting revenue. The friend has no skin in the game if they are 'helping out'. And based on the OP's details so far (no receipts) this is a mess and worse not a mere fixing of one tax year.

They are actually lucky the bank refused them. So they get this sorted now before it ends up 10 or 20 years down the line.

Who said she is doing this for free? She is a qualified accountant and I insisted on paying the going rate.

You'd swear I killed someone the way you are going on. I didn't pay tax when I should, I accept that and am making steps to rectify that.

 

[DannyBoyD]

I didn't pay tax when I should, I accept that and am making steps to rectify that.

Indeed.

But the rest of us did; so you have to accept that we get a bit cheesed off at those who didn't & possibly wouldn't but for the fact that your bank called you out on it.

 

[fiftrix]

Indeed.

But the rest of us did; so you have to accept that we get a bit cheesed off at those who didn't & possibly wouldn't but for the fact that your bank called you out on it.

I don't have to accept anything of the sort. I won't be judged by you or anyone else on the Internet. Not when I was looking for advice.