Tax implications for non resident landlord?

James Bond Junior

I will more than likely find myself moving abroad to work in the coming years. I own a house which would be in a high demand area for rentals so I will definitely be renting the house while I'm gone.

What would the tax implications be for me if I am non resident? The monthly rental yield would be about double the mortgage payment.

Pro Hoc Vice

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

James Bond Junior

Pro Hoc Vice wrote: »

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

Would a letting agent look after that?

Pro Hoc Vice

James Bond Junior wrote: »

Would a letting agent look after that?

Yes or any person resident can be paid the rent. The landlord will have to return tax every year, while he not resident the income is earned in Ireland.

Baby01032012

As previous poster said anyone can act as agent so if you have brother sister parents friend etc who can simply collect the withholding amount.

You will be subject to tax on your income here even if non resident so full tax return. Not simply case of rental income less mortgage repayment. Only 75% of interest is allowed to be offset against income. Plenty of threads on taxable rental income you can look at or talk directly to accountant if unsure of your liability.

4ensic15

Pro Hoc Vice wrote: »

Yes or any person resident can be paid the rent. The landlord will have to return tax every year, while he not resident the income is earned in Ireland.

Anyone who is not the owner must be registered as an agent with the PSRA!

Baby01032012

4ensic15 wrote: »

Anyone who is not the owner must be registered as an agent with the PSRA!

Thanks 4ensic15 would you have any link to support that. I'm sure you have basis but logically can't think why anyone would have to be registered as a property service provider to collect tax on behalf of the landlord, this is a Revenue requirement nothing to do with property as such.

4ensic15

Baby01032012 wrote: »

Thanks 4ensic15 would you have any link to support that. I'm sure you have basis but logically can't think why anyone would have to be registered as a property service provider to collect tax on behalf of the landlord, this is a Revenue requirement nothing to do with property as such.

The person would be collecting rent and therefore providing a property management service.

http://www.npsra.ie/website/npsra/npsraweb.nsf/page/whatwedo-en

Baby01032012

4ensic15 wrote: »

The person would be collecting rent and therefore providing a property management service.

http://www.npsra.ie/website/npsra/npsraweb.nsf/page/whatwedo-en

No, the person would be collecting a portion of the rent to be paid over to Revenue being the equivalent of the standard rate of income tax - yes it's rent but it's a tax collection for revenue.

Also even if they were collecting rent to have to be psra registered they would have to have a business of collecting rent. Not a private individual collecting for a friend or relative for no gain.

Marcusm

4ensic15 wrote: »

The person would be collecting rent and therefore providing a property management service.

http://www.npsra.ie/website/npsra/npsraweb.nsf/page/whatwedo-en

Setting aside whether the mere deposit of the rent into an account of an Irish resident might inclvole a letting service (which I think is doubtful), if no consideration is provided to the agent then it is not providing a regulated property service.

4ensic15

Marcusm wrote: »

Setting aside whether the mere deposit of the rent into an account of an Irish resident might inclvole a letting service (which I think is doubtful), if no consideration is provided to the agent then it is not providing a regulated property service.

Just because a person is not being paid does not mean does not mean they are not providing a service!

Marcusm

4ensic15 wrote: »

Just because a person is not being paid does not mean does not mean they are not providing a service!

Perhaps you might read the definition of "property service" a little more closely!

athtrasna

Mod note Enough bickering please, take it to pm if you want to continue this disagreement. It's off putting for other posters who may want to contribute to the op's post. Thank you

sunnysoutheast

4ensic15 wrote: »

Just because a person is not being paid does not mean does not mean they are not providing a service!

Are you saying that an Irish resident Collection Agent - as defined by Revenue in IT70 - needs to be registered with the PSRA?

James Bond Junior

So if I set up an account for the rent to paid into could I hold back a certain amount for tax at year end?

Marcusm

James Bond Junior wrote: »

So if I set up an account for the rent to paid into could I hold back a certain amount for tax at year end?

Technically, if the tenant pays into your account then the tenant should withhold 20% and remit it to the Revenue. If you estimate the amount of taxable income, you might find that this is not a cost to you if you have low expenses (75% of interest, perhaps some depreciation on furniture etc). Remember that you can only obtain tax relief on 75% of the interest element of the mortgage payment and you also must register with PRTB to obtain that relief.

If you're ultimate tax liability is likely to be less than 20% of the gross rent then it is worthwhile having the rent paid to a person resident in Ireland. This need not be a professional letting agent. They will then become responsible for ensuring that the correct amount of tax is paid and returns filed on your behalf.

4ensic15

sunnysoutheast wrote: »

Are you saying that an Irish resident Collection Agent - as defined by Revenue in IT70 - needs to be registered with the PSRA?

An irish resident Collection Agent is providing a property service so needs to be registered with the PSRA. This is as a protection to the owner.

Pawwed Rig

This withholding tax issue is always the first thing that posters here jump on whereas in reality it is not something Revenue are overly concerned about once returns are filed.
The tax implications depend on how much rental income you receive. You will be entitled to some tax credits too which would need to be calculated based on your situation. You may also get some exemptions if a non resident declaration is made (PRSI for example).
If you hire a tax advisor his fee would be a deductible expense.

GGTrek

The 20% witholding rule is very debatable and controversial. I have yet to see revenue try to enforce it through the courts. It is a very clear example of tax discrimination between residents and non residents which especially in the case of EU residents would hit a serious wall against an established ECJ case law against it. I seriously doubt revenue would prosecute landlord or even worse tenant after the right amount of tax has been calculated, tax return filed and tax paid.

4ensic15

GGTrek wrote: »

The 20% witholding rule is very debatable and controversial. I have yet to see revenue try to enforce it through the courts. It is a very clear example of tax discrimination between residents and non residents which especially in the case of EU residents would hit a serious wall against an established ECJ case law against it. I seriously doubt revenue would prosecute landlord or even worse tenant after the right amount of tax has been calculated, tax return filed and tax paid.

The revenue have done it to tenants. The Ombudsman has complained about it. The tax levied is the same. It is simply an enforcement mechanism. It is well recognised that tax on rental income is due to the jurisdiction in which the property is situate and all tax treaties make provision for it. It has been the case since Ireland joined the EU and has not changed. AS a general proposition, doubts about enforcement only mean you are asking the o/p to be a test case.

Baby01032012

4ensic15 wrote: »

An irish resident Collection Agent is providing a property service so needs to be registered with the PSRA. This is as a protection to the owner.

Do you know of many letting agents that provide that for their clients? Just interested to know.

I stand over my previous comments. It's silly to suggest that only a letting agent can collect tax for a non resident landlord. I'm not saying they don't, but anyone can do it. tax collection is not a service that's regulated by the PSRA

Claw Hammer

Baby01032012 wrote: »

Do you know of many letting agents that provide that for their clients? Just interested to know.

I stand over my previous comments. It's silly to suggest that only a letting agent can collect tax for a non resident landlord. I'm not saying they don't, but anyone can do it. tax collection is not a service that's regulated by the PSRA

They are collecting the rent. they remit tax out of it, which is a separate matter. Collecting rent is a property service. Many estate agents collect rent on behalf of their clients.

Marcusm

Claw Hammer wrote: »

They are collecting the rent. they remit tax out of it, which is a separate matter. Collecting rent is a property service. Many estate agents collect rent on behalf of their clients.

Just so it does not get lost in the various discussions, if the OP gets a family member or friend to collect the rent on a pro bono basis and act as agent or collection and services, it will not require a licence.

“property service” means the provision, for consideration, in the State, in respect of property located within or outside the State, of any of the following

Bold Abdu

A lot of over thinking in this thread.

It's a fairly straightforward process.

Appoint a family member as Collection Agent and get a tax advisor to file your annual return.

I've 20+ non-resident landlord clients and a Collection Agent problem has never arisen with Revenue.

Pawwed Rig

Bold Abdu wrote: »

I've 20+ non-resident landlord clients and a Collection Agent problem has never arisen with Revenue.

Agreed. I have never heard of a PSRA requirement and am fairly certain that the definition in the legislation does not require it.