Renting your house out

petshopper

Hi, I bought my house in 2002, but now I am off to Oz for a year so I want to rent it out.
I am liable for stampduty now however because I am renting the house out within 5 years of buying it ...:(

Anyone know any loopholes/way of avoiding this please?!

fatboypee

petshopper wrote:

Hi, I bought my house in 2002, but now I am off to Oz for a year so I want to rent it out.
I am liable for stampduty now however because I am renting the house out within 5 years of buying it ...:(

Anyone know any loopholes/way of avoiding this please?!

do you have to declare you're renting it out ? Maybe a thick question....

petshopper

Well if a tenant wants to claim rent relief they will be giving the landlords name and address ..... so if you havent declared that you are renting the house out then you may get caught I think ...

fatboypee

Are you on good terms with the solicitor who did the conveyancing for you ?
Maybe best to simply call them and ask the question....

I wasn't aware of the stamp duty clause, understand why its there but its still annoying if you only want to rent temporarilly...

No friends/brothers/sisters who'd take a reduced rent and not claim the tax back... ?

antoinolachtnai

If you are moving abroad for the purpose of work, I think there may be an exception to this. I am not at all sure about that. You would need to check with a tax professional.

kluivert

Stamp Duty is for the transfer to title deeds. Doesnt apply for when your renting.

If you want you can just give your PPS No. to the tenants in order to claim tax credit for renting, thats all they need.

Have a heard of the rent a room scheme, you can receive rental income to the sum of circa 6720e per year tax free.

antoinolachtnai

kluivert wrote:

Stamp Duty is for the transfer to title deeds. Doesnt apply for when your renting.

If you want you can just give your PPS No. to the tenants in order to claim tax credit for renting, thats all they need.

Um, not quite true. Leases with a value of more than 19k or so are also subject to stamp duty, payable by the tenant, but that's a separate matter.

I think the OP is worried because he was given a full or partial exemption from stamp duty and is concerned that the revenue will want to claw this money back.

Have a heard of the rent a room scheme, you can receive rental income to the sum of circa 6720e per year tax free.

Strictly speaking you are supposed to be living there to avail of this. But there is probably a little bit of room for manouver.

D'Peoples Voice

petshopper wrote:

Well if a tenant wants to claim rent relief they will be giving the landlords name and address ..... so if you havent declared that you are renting the house out then you may get caught I think ...

I wouldn't worry too much about it, I heard recently that the rental property market in Ireland (Rep of ) is estimated (in value terms, base year 2005) to be a bigger black market than cocaine or prostitution.
The revenue don't have the resources to check up on landlords not declaring rented accomodation, and I believe the government don't have the inclination to make it a priority and resource the revenue office. That's probably why the Revenue never declared how many people admit they are renting houses/flats, because people will know instantly their figures fall way short of the CSO/Census.
This is Ireland, first time buyers are overstretching themsleves to pay stamp duty, while buy-to-let investors escape tax because the tax office does not have the staff to cross-reference records in the stamp duty office with those paying tax on rental income on their fourth & fifth properties!
Yo are heading away for one year, I say enjoy it, and don't worry about the under-resourced tax office catching up with you.

antoinolachtnai

That is incorrect in general. If you rent out a property on an ongoing basis, and the income is in the tax net, you will have to pay the tax and interest and maybe penalties, maybe not today, maybe not tomorrow, but eventually.

Maybe you could tell us where you heard this information from recently.

The OP might or might not get away with it. However you are undermining the majority of tax-compliant landlords by encouraging people to enter the market as fly-by-night operators.

Sonnenblumen

antoinolachtnai wrote:

However you are undermining the majority of tax-compliant landlords by encouraging people to enter the market as fly-by-night operators.

A bit off topic, but caught my eye. 'Tax compliant landlords' a lot done but plenty more to do I would say. DO you know what % of landlords are registered? Certainly from my days as a student renting, I hardly heard of a landlord with a heart never mind a conscience, tax never entered the equation. Today I know it's a little different, fewer landlords are screwing fewer tenants, but its still out there, we've alos new regs to protect tenants. I've seen plenty of the same of rented accomodation that leaves alot to be desired. I'm not downgrading all landlords but GREED is still the buzz in this bizz and many not happy with reasonable rent returns/good capital appreciation, a lot still ignore issues which tenants might have tec.

I've also rented and beware who you get in as tenants, hire a property management agency, expect to pay annual fee (equivalent to 10% of rental income) but can be offset along with all other associated rental costs/expenses against tax liabilities.

shoegirl

antoinolachtnai wrote:

That is incorrect in general. If you rent out a property on an ongoing basis, and the income is in the tax net, you will have to pay the tax and interest and maybe penalties, maybe not today, maybe not tomorrow, but eventually.

Maybe you could tell us where you heard this information from recently.

The OP might or might not get away with it. However you are undermining the majority of tax-compliant landlords by encouraging people to enter the market as fly-by-night operators.

I'm sorry but are you suggesting that the "majority" of landlords are tax compliant? Because in my experience of 10 years renting, only about 50% are. If even that. It is known that less than 50% of all tenancies are registered with the PTRB - since the main reason for not registering is usually fear of getting caught evading tax, I would guess that the percentage registered - which according to Threshold is about 50% - matches those who are declaring tax.

I'm quite surprised that the Revenue don't dedicate a unit to this as the pickings would be very rich indeed. All you'd need to do is check the stamp duty records against PPS records. If the home address doesn't match the address, or the person owns more than one property, then investigate it to see who is living there. If another PPS holder holds the address and is clearly unrelated then immediate action can be taken without ever leaving the desk.

In fact you could quite easily write a computer program to do the job for you. (Woo more outsourcing opportunities!) This could then generate a hitlist for investigation. Not many resources would then be required and the lost tax revenue would be more than substantial. In my experience of tax evading landlords, they aren't in the habit of discounting their rents - they still look for the market rate!

hmmm

It's going to be so utterly simple for the revenue to cross check the Rent 1 forms they receive from tenants to income tax records and find out whether the landlord is avoiding tax on rental income. Even if you don't give your tenants your PRSI #, it only adds one additional step to the process - the revenue will happily accept the form without the PRSI number if your landlord won't give it to you.

A number of landlords are making "deals" with tenants where they give a deduction on rents if tenants agree not to claim their tax relief. Because this relief can be backdated, once the tenant leaves the accomodation they should accept the double free money by claiming their relief.

Anyone who thinks that they won't get caught is going to eventually be found out, and the penalties will be onerous.

RainyDay

D'Peoples Voice wrote:

I wouldn't worry too much about it, I heard recently that the rental property market in Ireland (Rep of ) is estimated (in value terms, base year 2005) to be a bigger black market than cocaine or prostitution.
The revenue don't have the resources to check up on landlords not declaring rented accomodation, and I believe the government don't have the inclination to make it a priority and resource the revenue office. That's probably why the

This sounds like all the guff I heard in the 80's & 90's about how Revenue would never catch all those cute hoors with their non-resident accounts. Revenue have caught them - they just waiting 10-15 years to let the punitive Revenue-rates for interest (8% pa iirc) build up, as well as penalties.

Anyone who believes that they are safe in evading tax based on Revenue's current attitudes or the current Government's attitudes is a fool.

D'Peoples Voice

RainyDay wrote:

This sounds like all the guff I heard in the 80's & 90's about how Revenue would never catch all those cute hoors with their non-resident accounts. Revenue have caught them - they just waiting 10-15 years to let the punitive Revenue-rates for interest (8% pa iirc) build up, as well as penalties.

Anyone who believes that they are safe in evading tax based on Revenue's current attitudes or the current Government's attitudes is a fool.

Apples and oranges my friend.
Firstly you are right, we did all know in the 80s that something was not right with respect to the capital outflows from the country. Even the central bank admitted it has it's doubts.
However why was, that back then, when we needed the money nothing was done, why was it left until we were in a booming economy?
This brings me to the second point, the tribunals. The Payments to politicians and planing tribunals FORCED the officials to investigate these accounts. They would not have done so otherwise in my opinion, and I think the timing backs up my belief.
Thirdly, many polticians knew that they was perhaps 1,000 people involved in such accounts, so the knock-on effect from these people would be smaller than the credit they got from the thousands of other voters. The same is not the case with property investors.We are talking about thousands of landlords EVADING tax, no politician would be brave enough to ask for an investigation into them nor would the understaffed Revenue wish to take on such a momentous task.
Therefore for someone letting property, they shouldn't worry about the revenue in my opinion, the government will turn a blind eye. Their excuse can be, well it was always going on wasn't it, it wasn't just when we were in power.

antoinolachtnai

shoegirl wrote:

I'm quite surprised that the Revenue don't dedicate a unit to this as the pickings would be very rich indeed. All you'd need to do is check the stamp duty records against PPS records. If the home address doesn't match the address, or the person owns more than one property, then investigate it to see who is living there. If another PPS holder holds the address and is clearly unrelated then immediate action can be taken without ever leaving the desk.

They do have a unit that does just this. It is called 'probate'. They follow the hearse, then strip the money out of your remaining assets.

In a time of rising property prices, there is no point for the revenue in rushing into collecting money they know they will just pick up in the end anyway. It is like a piggy-bank for them.

There is just no future in tax evasion on rental property income. The fact that so many people are doing it surprises me a bit, but not too much.

RainyDay

D'Peoples Voice wrote:

Apples and oranges my friend.
Firstly you are right, we did all know in the 80s that something was not right with respect to the capital outflows from the country. Even the central bank admitted it has it's doubts.
However why was, that back then, when we needed the money nothing was done, why was it left until we were in a booming economy?
This brings me to the second point, the tribunals. The Payments to politicians and planing tribunals FORCED the officials to investigate these accounts. They would not have done so otherwise in my opinion, and I think the timing backs up my belief.
Thirdly, many polticians knew that they was perhaps 1,000 people involved in such accounts, so the knock-on effect from these people would be smaller than the credit they got from the thousands of other voters. The same is not the case with property investors.We are talking about thousands of landlords EVADING tax, no politician would be brave enough to ask for an investigation into them nor would the understaffed Revenue wish to take on such a momentous task.
Therefore for someone letting property, they shouldn't worry about the revenue in my opinion, the government will turn a blind eye. Their excuse can be, well it was always going on wasn't it, it wasn't just when we were in power.

All the tribunals were set up by Acts of the Dail (i.e. by politicians). Yes, there was public demand and/or media demand, but the final decision was down to the Dail. The 'it was always going on' excuse doesn't hold water. It didn't hold water on planning corruption issues. It didn't hold water on nursing home charges. It doesn't hold water on tax evasion issues.

Revenue technology is improving every day. They have implemented some pretty sophisticated profiliing systems to highlight taxpayers who fall outside typical parameters. They are actively improving tracking of foreign transfers at present to pick up those who have property overseas. A left-leaning future coalition without FF could take a dramatically different view on this matter to the current Govt.

Anyone who makes a decision to evade tax based on your assumption that 'we'll never be caught' is a fool.

D'Peoples Voice

RainyDay wrote:

A left-leaning future coalition without FF could take a dramatically different view on this matter to the current Govt.

Anyone who makes a decision to evade tax based on your assumption that 'we'll never be caught' is a fool.

I'd love to think you are right and everyone will be made pay their fair share of property related tax, but answer me this.
When house prices were soaring, and investors were choking FTB out of the market, and both the Government and the left-leaning opposition were trying to make the market more appealing to FTB and less so for investors, why did they not suggest better policing of the rental income market then?
Think about it, better policing of the system would force people to be tax compliant, it would make such investments less attractive to investors and in doing so, both removing investors from the market for FTB to get in and removing the pressure on house prices.
They didn't do it then, when we needed such enforcement the most, so why would they do it in the future?
Also not all landlords collect money through the banking system, with many it's cash in the hand, so how could you prove they received rent every month for the last 10 years say? With offshore banking, there was a paper trail!

RainyDay

You're missing the point. You are basing your view on the future exclusively on what happened from the past. The future will be different from the past. We will be in a different legal, financial, economic and political position. To base a financial decision (i.e. investment on residential property) on an assumption that none of these this will lead to a change in focus on tax evasion in this sector would be just plain foolish.

Note that I'm not saying that this will definitely happen. I'm not putting a definite timescale out there. I'm saying that there is a signficant chance that it will happen in the lifetime of current landlords.

PS Revenue don't have to find the paper trail. If they/CAB raise a tax assessment, the onus is on the taxpayer to prove that they were in fact compliant - guilty until proven innocent if you like. If you have assets which are out of what with the assets owned by others with similarly declared income, you may well be flagged for special attention by Revenue.