Renting PPR out and Renting Another House in Different Area - Tax Implications

Siobhan67

Getting ready to do my tax return and a bit confused in relation to renting tax implications.

We have relocated to another area and are renting a house. In turn we are renting out our own PPR (household tax paid and PRTB registered).

In doing self assessment tax do we:

1. Declare rent received minus interest paid on mortgage in the relevant year, minus repairs and maintenance? Can I claim for landlord insurance on house also?

2. Declare rent paid to landlord of house we are renting which I don't think was PRTB registered (never got a letter from them). Landlord was told I was tax complaint and would be declaring this rent.

Any help appreciated. Thanks.:)

murphaph

Siobhan67 wrote: »

1. Declare rent received minus interest paid on mortgage in the relevant year, minus repairs and maintenance?

Correct.

Siobhan67 wrote: »

Can I claim for landlord insurance on house also?

Yes.

You can claim for most costs associated with running the property. Exceptions are the household charge and the NPPR.

You can also claim for depreciation of the fixtures and fittings over 8 years. You are allowed to derive a "sensible" current value for all your fixtures and fittings (even if you don't have receipts for them all anymore) and begin depreciating them at 12.5% per anum for the next 8 years. Any new fixtures and fittings that you add (new boiler for example!) can then be depreciated separately for another 8 years and so on.

A small repair to a leaking boiler will be simply included as an expense, but a new boiler would constitute a capital investment, so would have to be depreciated as outlined above. What constitutes a repair and what constitutes a capital replacement can sometimes be a judgement call for you to make.

Siobhan67 wrote: »

2. Declare rent paid to landlord of house we are renting which I don't think was PRTB registered (never got a letter from them). Landlord was told I was tax complaint and would be declaring this rent.

Not sure about any of this but someone else can probably chime in here.

Valetta

Bear in mind the the interest you can claim is restricted to 75% of that paid.

Be sure to pay the NPPR as the penalties are severe. You probably won't have to pay it for 2012 if you are only starting to rent out the house now.

sunnysoutheast

Valetta wrote: »

Bear in mind the the interest you can claim is restricted to 75% of that paid.

Be sure to pay the NPPR as the penalties are severe. You probably won't have to pay it for 2012 if you are only starting to rent out the house now.

Liability for NPPR determined on 31st March of the year, due by 30th June I believe.

Is there any rule about deriving "sensible" current value of assets for depreciation?

Siobhan67

Thanks for the replies, all and for the item about depreciation in particular, murphaph.

From my reading of the 2009 Local Government Charges Act (on which NPPR is based) I am not liable to NPPR as I am fulfill the requirements of Section 5(5)(c) as below (quote from Act)

(5) If, on a liability date, an individual who is the owner of a
residential property—
(a) is incapacitated by reason of long term mental or physical
infirmity, and
(b) had been obliged, at a time prior to that date, due to the
said mental or physical infirmity, to vacate the said property,
which had been, immediately preceding that time,
his or her sole or main residence, and
(c) is normally resident in a place of which he or she is not
the owner,

then he or she shall not be liable to pay a charge in respect of that property in relation to that liability date.

I hadn't even thought about the NPPR as per the above I didn't think we were liable for it but I will ring my local Co Co tomorrow to find out same.

subway

Theres also the potential capital gains tax implication down the line. Read page 15 of this booklet:
http://www.revenue.ie/en/tax/cgt/leaflets/cgt1.pdf

mathepac

AFAIK you cannot claim mortgage interest relief and tax relief on rent paid. BTW your "PPR" is not the house you own, that is now an investment property. Your PPR is the house you pay rent on.

sunnysoutheast

Siobhan67 wrote: »

Thanks for the replies, all and for the item about depreciation in particular, murphaph.

From my reading of the 2009 Local Government Charges Act (on which NPPR is based) I am not liable to NPPR as I am fulfill the requirements of Section 5(5)(c) as below (quote from Act)

(5) If, on a liability date, an individual who is the owner of a
residential property—
(a) is incapacitated by reason of long term mental or physical
infirmity, and
(b) had been obliged, at a time prior to that date, due to the
said mental or physical infirmity, to vacate the said property,
which had been, immediately preceding that time,
his or her sole or main residence, and
(c) is normally resident in a place of which he or she is not
the owner,

then he or she shall not be liable to pay a charge in respect of that property in relation to that liability date.

I hadn't even thought about the NPPR as per the above I didn't think we were liable for it but I will ring my local Co Co tomorrow to find out same.

Note that those clauses are "and"s. I believe that exemption is to cover people who go into care.

If this isn't your situation I would expect you to be liable for NPPR depending on the status of the house you own on the relevant liability dates.

relax carry on

Siobhan67 wrote: »

2. Declare rent paid to landlord of house we are renting which I don't think was PRTB registered (never got a letter from them). Landlord was told I was tax complaint and would be declaring this rent.

Any help appreciated. Thanks.:)

Part 1 has already been answered pretty much. Here's the link to Revenues guide to rental income. You should have also cancelled your TRS with Revenue.

http://www.revenue.ie/en/tax/it/leaflets/it70.html

Part 2. Unless you started renting at your present address before 07/12/10 you cannot claim the rent tax credit.

http://www.revenue.ie/en/tax/it/credits/rent-credit.html

Siobhan67

Thanks for all the replies and "sunnysoutheast" thanks very much - had missed the "and" part! Now I do have to pay it!

And "relax carry on" thanks for Revenue links.

sunnysoutheast

Siobhan67 wrote: »

Thanks for all the replies and "sunnysoutheast" thanks very much - had missed the "and" part! Now I do have to pay it!

And "relax carry on" thanks for Revenue links.

No probs, we're in a similar situation. If your rental was your PPR on 31/3/2012 then no NPPR due for 2012 (as I understand it).