Quick question on rental income

djimi

PRTB registration costs €90, not €200.

Jasper79

ElKavo wrote: »

Does the capital spend not have to occur within the tenancy?

I.E. I have a 2.5k wardrobe in the house. Installed before we moved in 7 years ago. Can I claim 1 year of 2.5k @12.5% or 8 years... Same for appliances?

Thanks

My understanding of this is that as the wardrobe is 7 years old at time of letting you can claim 1 year wear and tear ( 8 years total for capital allowances) at 12.5%, so 312.5 and then wardrobe is fully written off for accounting purposes... open to correction though., could be wrong.

ElKavo

Can you claim for a garden shed? There doesn't seem to be a list of whats an acceptable expense and what isn't anywhere.

Can you claim for kettle / toaster / microwave? You would think with the amount of rented property's our there that there should be a minimum requirement. From what I've seen there isn't one, I stand to be corrected ( hopefully)

The_Morrigan

OP you really need to seek professional advice in relation to this, you need to sit down with an accountant for a consultation on how you can prepare your taxes. If anyone here is incorrect in their advice or you misinterpret it you'll end up in hot water with Revenue.

ElKavo

The_Morrigan wrote: »

OP you really need to seek professional advice in relation to this, you need to sit down with an accountant for a consultation on how you can prepare your taxes. If anyone here is incorrect in their advice or you misinterpret it you'll end up in hot water with Revenue.

Yes I know I have to sit down with an accountant on this before making a return... Just trying to gauge the water as much as possible. It isnt too bad when you have a rough idea as to our exposure on the tax side.

Thanks

I wont need to do a return on the property till next year anyhow... I just need to know what to keep. I'm guessing everything!!

cookie1977

The_Morrigan wrote: »

OP you really need to seek professional advice in relation to this, you need to sit down with an accountant for a consultation on how you can prepare your taxes. If anyone here is incorrect in their advice or you misinterpret it you'll end up in hot water with Revenue.

Cannot agree more. Some money spent on proper financial advice will be money well spent! This is a business and you have an asset to protect as well as your name and financial standing.

sunnysoutheast

cookie1977 wrote: »

Cannot agree more. Some money spent on proper financial advice will be money well spent! This is a business and you have an asset to protect as well as your name and financial standing.

second this...plus it's deductible.

The capital allowances are available against fixtures and fittings, there is no definitive definition of this but a working assumption is that, if it can in theory, be removed and reused elsewhere it is available for depreciation. So carpets are OK, tiles aren't. Freestanding baths are OK, built-ins aren't.

In terms of pre-existing items again a working assumption is that the item can be valued according to how far through its 8 year accounting lifespan it is, and then the residual value can be depreciated over 8 years. That is the way I was advised to approach it in any case.

It would be good to get a definitive view, but I don't know of one.

ElKavo

sunnysoutheast wrote: »

second this...plus it's deductible.


It would be good to get a definitive view, but I don't know of one.

Thanks, this is the problem it all seems open to interpretation, So a good accountant could get your bill right down. But if they think they are smarter than they actually are you could be knackered if their interpretation and the revenues interpretation don't match. Or is it a case that the accountant would be held negligible?

It just seems to be a mine field but obviously a good accountant is the place to go. Is there any landlord specific accountants or will any old number jockey do the trick?

Thanks

sunnysoutheast

ElKavo wrote: »

Thanks, this is the problem it all seems open to interpretation, So a good accountant could get your bill right down. But if they think they are smarter than they actually are you could be knackered if their interpretation and the revenues interpretation don't match. Or is it a case that the accountant would be held negligible?

It just seems to be a mine field but obviously a good accountant is the place to go. Is there any landlord specific accountants or will any old number jockey do the trick?

Thanks

While I don't want to point people in the direction of other forums there are detailed discussions regarding taxation of rental income etc., including regular posts from accountants, on other sites.

As long as I (and our accountant!) can justify my position to Revenue I am comfortable with things. I know of people who are much more aggressive than I am in what they claim, but that's up to them.

quietsailor

Here's some info about the basic requirements in law that have to be in a house:
Residential Tenancies Act the actual law about tenancies
Housing Standards Act - the minimum standard the house should have
Housing standards simplified A government document explainig the min. standards expected in rented acomodation, a bit easier to digest than the SI above

ElKavo

sunnysoutheast wrote: »

While I don't want to point people in the direction of other forums there are detailed discussions regarding taxation of rental income etc., including regular posts from accountants, on other sites.

As long as I (and our accountant!) can justify my position to Revenue I am comfortable with things. I know of people who are much more aggressive than I am in what they claim, but that's up to them.

Thanks for the reply... Yes I think I'll need an aggressive accountant i'm talking max payne aggresssion!

ElKavo

quietsailor wrote: »

Here's some info about the basic requirements in law that have to be in a house:
Residential Tenancies Act the actual law about tenancies
Housing Standards Act - the minimum standard the house should have
Housing standards simplified A government document explainig the min. standards expected in rented acomodation, a bit easier to digest than the SI above

Thanks for your reply the last doc is easier to go through alright. Its good to know what is required. My letting agent seems to have different ideas as to what is required.

riclad

You can claim as a landlord ,
for repairs, items, bought for the property,
eg furniture,fridge, insurance,service charges,
accountants,agents fees ,advertising.75 per cent loan interest, prtb fee.
etc
some landlords don,t claim for everything,
cos if you have a large loan,
75 per cent of interest,
may be more than the rental income,

ie in revenues eyes your profit is zero.



SO in that case no point in claiming for 50 euro
for new set of plates ,cutlery.
AND holding on to dozens of small reciepts

IF your tax bill is very low ,and you are well off ,
you may not be bothered holding onto
every single receipt .

IN 10 years time if your interest payment decreases,
tax rises ,
you,ll need to claim for every expense.

Theres, no requirement to claim for every single expense,

but you have to fill in a tax return every year,
whether you make a profit is up to the revenue to
calculate.


AN agressive accountant cant make up expenses,
he can only work with the documents ,and
reciepts which you give to him.
at the time he sends in the tax return.

IF I was a landlord ,
paying,
say 3k tax,

i,d employ ,an accountant, agent,
have a diy person pro ready to carry out repairs.
AS you can claim for these expense,s against rental income.

THERES a limited amount of things an accountant can claim for
in respect to landlords expenses.

I think you can claim for any item that a tenant would need ,
eg plates, cooker, fridge,
microwave,
cutlery,
heaters,
furniture, beds, sheets, sofa,pillows.
SAY you buy a sofa for 200 ,
claim for it ,divide 200x 8,
you get tax allowance of 25 euro per year on that item.
You need to hold on to reciept when you buy any item for the rental unit.
HOLD onto all documents,for 6 years .
especially large items you claim for eg fridge ,tv.

I don,t think you could go out and buy a laptop,
or a 3d tv and claim for that ,
as tenants don,t require those items to live in a property.
SOME landlords put in tvs,
nd say,
if you want to get,sky tv,
cable tv, installed thats up to you.

I do,nt know how it works ,re price limits on items,
could i buy a 500 euro sofa,
when theres plenty of standard sofa,s on sale for 200 euros.

marathonic

riclad wrote: »

You can claim as a landlord ,
for repairs, items, bought for the property,
eg furniture,fridge, insurance,service charges,
accountants,agents fees ,advertising.75 per cent loan interest, prtb fee.
etc
some landlords don,t claim for everything,
cos if you have a large loan,
75 per cent of interest,
may be more than the rental income,

Claim for every expense, even if the mortgage interest is high enough to offset all rental income. The more losses you can carry forward, the longer it will be before you are eventually liable for income tax.

riclad

WELL you should claim for larger items,like fridges,
beds,furniture,microwave,
as the credits are taken over an 8 year period .
Even if this year your tax is zero ,because you have a large mortgage.
I,M NOT sure if its worth claiming for things, like
towels,plates, 30 euro,10 euro items
if your tax on rental income this year is zero.

I know a landlord ,loan is 130k plus,
rent is 500 per month,
this person probably won,t make a taxable profit
for at least 5 years from now.
House was bought in 2007.

ElKavo

riclad wrote: »

WELL you should claim for larger items,like fridges,
beds,furniture,microwave,
as the credits are taken over an 8 year period .
Even if this year your tax is zero ,because you have a large mortgage.
I,M NOT sure if its worth claiming for things, like
towels,plates, 30 euro,10 euro items
if your tax on rental income this year is zero.

I know a landlord ,loan is 130k plus,
rent is 500 per month,
this person probably won,t make a taxable profit
for at least 5 years from now.
House was bought in 2007.

I think I'll have to claim for everything I have. I have asked my mortgage provider for a statement on my mortgage from last year to gauge the interest relief i can claim back. My mortgage is on 190k and the rent max will be 700 pm. At a guess Id say I'm looking at a maximum relief of about 2.5k pa. My house was also bought in 2007. with the relief on interest and other expenses I have roughly calculated I would guestimate that I'm looking at a 900 tax bill.

If I cant claim as much back as possible then I'm looking at a bill which I really don't want to have.

***Rant begins***

I have also sent letters to my local td's and the minister for finance as I had no Idea this was the case. My mortgage payments are tiny by comparison to some out there and It really just reeks of inequality. I can see thousands of familys being trapped in un suitable homes whom are doing their best to pay their way and not defaulting on payments. We have always done everything above board and it seems that the more honest you are with the system the more you get screwed!

***Rant Ends***

The_Morrigan

ElKavo wrote: »

I think I'll have to claim for everything I have. I have asked my mortgage provider for a statement on my mortgage from last year to gauge the interest relief i can claim back. My mortgage is on 190k and the rent max will be 700 pm. At a guess Id say I'm looking at a maximum relief of about 2.5k pa. My house was also bought in 2007. with the relief on interest and other expenses I have roughly calculated I would guestimate that I'm looking at a 900 tax bill.

If I cant claim as much back as possible then I'm looking at a bill which I really don't want to have.

***Rant begins***

I have also sent letters to my local td's and the minister for finance as I had no Idea this was the case. My mortgage payments are tiny by comparison to some out there and It really just reeks of inequality. I can see thousands of familys being trapped in un suitable homes whom are doing their best to pay their way and not defaulting on payments. We have always done everything above board and it seems that the more honest you are with the system the more you get screwed!

***Rant Ends***

The bolded bit....is that referring to your TRS?

ElKavo

The_Morrigan wrote: »

The bolded bit....is that referring to your TRS?

No, That is the 75% that I can claim back against tax paid on the rental income. Sorry if that was not clear.

The_Morrigan

ElKavo wrote: »

No, That is the 75% that I can claim back against tax paid on the rental income. Sorry if that was not clear.

Was curious as to the relevance of the purchase in 2007 and interest relief - usually that ends up being TRS.

Thanks!

ElKavo

The_Morrigan wrote: »

Was curious as to the relevance of the purchase in 2007 and interest relief - usually that ends up being TRS.

Thanks!

No I'll loose any trs I have left, only 6 months I think and by the time I rent it out it'll be 2 -3 months, The extra interest will obviously go toward the reduced tax bill( well 75% of it).

marathonic

riclad wrote: »

I,M NOT sure if its worth claiming for things, like
towels,plates, 30 euro,10 euro items
if your tax on rental income this year is zero.

Well I wouldn't provide towels and the likes in a rental property but, if I were to replace €40 worth of small items, I'd place the receipts in along with my other receipts - even if my rent was below 75% of the mortgage interest.

Just because your tax is zero this year, doesn't mean it will be in future years. Therefore, why not add the €40 worth of small items to your tax loss for this year so that, a few years down the line, you can write it off against rental profits?

The €40 alone is enough to reduce your potential tax/USC/PRSI liability by €20.80. All for the sake of keeping a receipt.

Not wanting to keep receipts is something that I can see a lot of the amateur and accidental landlords doing. Anyone getting into BTL in any serious way should not have this problem.

Blured

Just another thing you may need to consider. There is a chance that your bank could use this as an opportunity to kick you off your tracker.

Your mortgage was approved as a residential one - the property will no longer be your PPR so the bank could have a claim that the mortgage should now be classed as a buy to let mortgage and thus move you from your tracker.

I really doubt this would happen but again, it is something you should consider

ElKavo

Blured wrote: »

Just another thing you may need to consider. There is a chance that your bank could use this as an opportunity to kick you off your tracker.

Your mortgage was approved as a residential one - the property will no longer be your PPR so the bank could have a claim that the mortgage should now be classed as a buy to let mortgage and thus move you from your tracker.

I really doubt this would happen but again, it is something you should consider

Hi thanks for reply. I was aware of this I am with Ulster bank. I called mortgage operations this morning and they said they couldn't answer that and I would have to speak to an agent in branch. I had mailed my point of contact in the branch on Sunday but as yet I have not heard anything back. if we were put on a higher rate like 4 or 5% I don't think the rental would be viable as we can command such a low rent. We may then have to explore other avenues.