New landlord help

Username2017

Hi I’m moving abroad and renting my house out. Regarding registering with the revenue and declaring tax , I’m confused. My friend lives abroad and rents her house to tenants at a lower rate and doesn’t declare tax. If I do declare- how much roughly am I looking at paying in tax?? Do most people declare or not ?? Any advice appreciated x
Renting at €1200pm
Mortgage €700pm

eddiervp20

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Caranica

By law you must pay tax on the income. You have two options to do so, appoint someone as your collection agent (can be a family member) to collect the tent and pay your tax bill or the tenants can pay 20% of the rent direct to Revenue.

Your friend is defrauding the State, that may well catch up with them and the penalties are significant.

Username2017

Caranica wrote: »

By law you must pay tax on the income. You have two options to do so, appoint someone as your collection agent (can be a family member) to collect the tent and pay your tax bill or the tenants can pay 20% of the rent direct to Revenue.

Your friend is defrauding the State, that may well catch up with them and the penalties are significant.

Thanks I know by law your are obliged

ted1

Yes most people declare , its very hard not to declare these days.

TomOnBoard

You also need to register the rental with the RTB.

Note: 80% of your mortgage interest portion (not the total repayment) is an allowable expense.

DubCount

Username2017 wrote: »

Hi I’m moving abroad and renting my house out. Regarding registering with the revenue and declaring tax , I’m confused. My friend lives abroad and rents her house to tenants at a lower rate and doesn’t declare tax. If I do declare- how much roughly am I looking at paying in tax?? Do most people declare or not ?? Any advice appreciated x
Renting at €1200pm
Mortgage €700pm

That's not a simple situation. You are going to have to consider your tax residency, and you may have tax obligations on the income in the country you are moving to, depending on the double tax treaty between Ireland and whatever country you are moving to. As mentioned by other posters, there may be requirements for withholding tax etc.

A session with an accountant to talk through your exact circumstances will be money well spent.

Username2017

DubCount wrote: »

That's not a simple situation. You are going to have to consider your tax residency, and you may have tax obligations on the income in the country you are moving to, depending on the double tax treaty between Ireland and whatever country you are moving to. As mentioned by other posters, there may be requirements for withholding tax etc.

A session with an accountant to talk through your exact circumstances will be money well spent.

Not a bad idea thank you

The_Conductor

DubCount wrote: »

That's not a simple situation. You are going to have to consider your tax residency, and you may have tax obligations on the income in the country you are moving to, depending on the double tax treaty between Ireland and whatever country you are moving to. As mentioned by other posters, there may be requirements for withholding tax etc.

A session with an accountant to talk through your exact circumstances will be money well spent.

You'll need two separate sessions with accountants.
Providing the country you're moving to has a reciprochal tax agreement with Ireland (many but not all countries do)- what happens is you have to make two tax declarations- one in Ireland- declaring your rental income (you will still have an Irish tax free allowance- not a standard one though- and you have costs such as the 80% of mortgage interest which you can use to offset against rental income before determination of taxable income).

Your tenants are obliged under Irish law to deduct 20% of the gross rent and pay it to the Revenue Commissioners. Your Irish agent (and you have to have one) will be furnished with a 'balancing statement' at the elapse of the tax year- against which you either pay any tax owed (after the 20% deduction the tenants pay) or- in some cases- you may even get a small refund.

You then furnish the details of your Irish tax return to the tax authorities in the country in which are then tax resident- and, providing the reciprochal tax agreement is in place, they offset the Irish tax paid by you- against the tax due (including the tax on rental income) in the country in which you're then resident.

You are obliged to register the tenancy with the RTB- declaring the rent the tenants are paying (the tenancy details will also have both their PPSNs and your PPSN). The rent details are automatically shared with Revenue- who are putting together a decent section looking specifically at rental income (and other 'cash-in-hand-business-transactions' at the moment). The tenant can lodge a case against you- up to 5 years after the elapse of the tenancy- if they're unhappy. Most tenants are unaware that they are legally obliged to withold 20% of the gross rent and forward it to the Revenue Commissioners- however, Revenue have taken a few court cases- so it may get more publicity going forwards.

There is a proposal to reintroduce a tenants rent tax credit- to encourage tenants to self declare rent paid- which will hang any landlords playing mindgames out to dry (and deservedly so!)

Your friend is being incredibly stupid- they will get caught- its just a matter of when, not if............. The penalties and charges may very well be a significant multiple of the actual tax they evaded. Remember- evasion is illegal- avoidance, may be immoral, but its not illegal.

Username2017

The_Conductor wrote: »

You'll need two separate sessions with accountants.
Providing the country you're moving to has a reciprochal tax agreement with Ireland (many but not all countries do)- what happens is you have to make two tax declarations- one in Ireland- declaring your rental income (you will still have an Irish tax free allowance- not a standard one though- and you have costs such as the 80% of mortgage interest which you can use to offset against rental income before determination of taxable income).

Your tenants are obliged under Irish law to deduct 20% of the gross rent and pay it to the Revenue Commissioners. Your Irish agent (and you have to have one) will be furnished with a 'balancing statement' at the elapse of the tax year- against which you either pay any tax owed (after the 20% deduction the tenants pay) or- in some cases- you may even get a small refund.

You then furnish the details of your Irish tax return to the tax authorities in the country in which are then tax resident- and, providing the reciprochal tax agreement is in place, they offset the Irish tax paid by you- against the tax due (including the tax on rental income) in the country in which you're then resident.

You are obliged to register the tenancy with the RTB- declaring the rent the tenants are paying (the tenancy details will also have both their PPSNs and your PPSN). The rent details are automatically shared with Revenue- who are putting together a decent section looking specifically at rental income (and other 'cash-in-hand-business-transactions' at the moment). The tenant can lodge a case against you- up to 5 years after the elapse of the tenancy- if they're unhappy. Most tenants are unaware that they are legally obliged to withold 20% of the gross rent and forward it to the Revenue Commissioners- however, Revenue have taken a few court cases- so it may get more publicity going forwards.

There is a proposal to reintroduce a tenants rent tax credit- to encourage tenants to self declare rent paid- which will hang any landlords playing mindgames out to dry (and deservedly so!)

Your friend is being incredibly stupid- they will get caught- its just a matter of when, not if............. The penalties and charges may very well be a significant multiple of the actual tax they evaded. Remember- evasion is illegal- avoidance, may be immoral, but its not illegal.

Ah ok well that answers that answers that , I’ll register so . Tenants are foreign so prob won’t know about the 20% . I’m not dealing with them so should I just have them pay full rent and do tax’s myself? I’m moving to USA

Samuel T. Cogley

Are you coming back? If not sell and save yourself an awful lot of hassle.

Username2017

Samuel T. Cogley wrote: »

Are you coming back? If not sell and save yourself an awful lot of hassle.

I have thought about it. Hopefully not coming back

Samuel T. Cogley

Username2017 wrote: »

I have thought about it. Hopefully not coming back

Get shot of it. If you get a deadbeat tenant you'll be having to pay the mortgage for at least a year and then remotely sort out all the damage they do. It's just not worth the stress.

That said I can understand hanging on to it for a while to make sure you're staying is Airbnb an option where it is?

Username2017

Samuel T. Cogley wrote: »

Get shot of it. If you get a deadbeat tenant you'll be having to pay the mortgage for at least a year and then remotely sort out all the damage they do. It's just not worth the stress.

That said I can understand hanging on to it for a while to make sure you're staying is Airbnb an option where it is?

They are moving in next week , I’ll come back in a year and see how things are looking hopefully they won’t have done to much damage

Lantus

Username2017 wrote:

They are moving in next week , I’ll come back in a year and see how things are looking hopefully they won’t have done to much damage

Hopefully they will have paid the rent! Although still infrequent it can take a year to remove non paying tenants from your property with all legal costs.

Hopefully you didn't tell them your going abroad making it potentially easier for them to renage payment and live rent free.

I'd of sold if my intention was not to return.

the_syco

Username2017 wrote: »

They are moving in next week , I’ll come back in a year and see how things are looking hopefully they won’t have done to much damage

Talk to an accountant, and a solicitor. In the long run it may be cheaper to put the tenants into AirBnB (and never step foot in your house) for a month and sell the house.

Otherwise, you'll either need to pay someone to fix all the minor issues, or they could bleed you dry.