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Rent tax calculation (Paye)

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  • 28-07-2018 7:08pm
    #1
    madwidow
    Registered Users Posts: 46 ✭


    Hi all,

    Id appreciate a word of advice for preping the Form 12 for the rental income pls. Which is correct:

    1. Gross rental amount x 52% (tax, prsi, usc) and then make deductions
    Or
    2. Gross rental amount - deductions and then x 52% on the net amount

    Though it was option 1 but i seen both on the boards?


Comments

  • Options
    #2
    Bubbaclaus
    Registered Users Posts: 4,461 ✭✭✭Bubbaclaus


    Obviously the 2nd one.

    And if you haven't already coded the rental income on your tax credit certificate then you must file a Form 11, not a Form 12.


  • Options
    #3
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    Its not quite as simple as option 1 or option 2. Some expenses are not allowable (e.g. property tax) for tax purposes. Its therefore 52% of income less allowable expenses.


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    #4
    madwidow
    Registered Users Posts: 46 ✭madwidow


    Bubbaclaus wrote: »
    Obviously the 2nd one.

    And if you haven't already coded the rental income on your tax credit certificate then you must file a Form 11, not a Form 12.

    Thank you. Guess hopes are dashed for less tax to pay.
    Form 11 is for selfemployed or am i wrong again? Is form 12 then afterwards?

    Im due a 1st declaration for 2017 rent in october this for 4 months rental income received and the plelimery for the next.
    I employed fulltime which uses up my tax credits and puts me in higher tax bracket on wages already.
    Sorry for all the questions, I know i can seek professial advise but id like to try to figure it out inbetween or hire if i cannt..


  • Options
    #5
    madwidow
    Registered Users Posts: 46 ✭madwidow


    DubCount wrote: »
    Its not quite as simple as option 1 or option 2. Some expenses are not allowable (e.g. property tax) for tax purposes. Its therefore 52% of income less allowable expenses.

    Thanks. Options are really for a math parts. Getting rest of everything through research.
    Property is morgaged. 80% interest, Rtb fee, i still pay some of the bills even though i dont live there which makes them deductable, management fee, house insurance..
    I think morgage protection falls into deductable but is life insurance for the value of property?


  • Options
    #6
    Gumbo
    Moderators, Society & Culture Moderators Posts: 39,339 Mod ✭✭✭✭Gumbo


    Why not let a pro do the first one for you?
    Their fee is 100% tax deductible....


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  • Options
    #7
    ted1
    Registered Users Posts: 23,524 ✭✭✭✭ted1


    USC is payable on total income.

    Tax is then due on income - expenses (mortgage relief, house insurance, maintenance, 12.5% depreciation of fittings and furniture, etc)


  • Options
    #8
    madwidow
    Registered Users Posts: 46 ✭madwidow


    kceire wrote: »
    Why not let a pro do the first one for you?
    Their fee is 100% tax deductible....

    But would they give you guidence to complete other one?


  • Options
    #9
    madwidow
    Registered Users Posts: 46 ✭madwidow


    ted1 wrote: »
    USC is payable on total income.

    Tax is then due on income - expenses (mortgage relief, house insurance, maintenance, 12.5% depreciation of fittings and furniture, etc)

    Thanks for that. Ended up renting my home following a relatioship breakdown so most of fitting and furtinuture were bough befor hand for a family home. Do i just choose an approx amount with consideration of wear and tear?


  • Options
    #10
    Happy4all
    Closed Accounts Posts: 2,089 ✭✭✭Happy4all


    Bubbaclaus wrote: »
    Obviously the 2nd one.

    And if you haven't already coded the rental income on your tax credit certificate then you must file a Form 11, not a Form 12.

    There is still a threshold for unearned income that might allow the form 12 option


  • Options
    #11
    madwidow
    Registered Users Posts: 46 ✭madwidow


    Happy4all wrote: »
    There is still a threshold for unearned income that might allow the form 12 option

    Rental income will be declared 1st time this year.
    Im a paye for primary income and 5k are on the higher tax band already?


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  • Options
    #12
    Bubbaclaus
    Registered Users Posts: 4,461 ✭✭✭Bubbaclaus


    Happy4all wrote: »
    There is still a threshold for unearned income that might allow the form 12 option

    The threshold is 0 if you didn't code an estimate of your additional income onto your tax credit cert for that year.


  • Options
    #13
    Gumbo
    Moderators, Society & Culture Moderators Posts: 39,339 Mod ✭✭✭✭Gumbo


    madwidow wrote: »
    But would they give you guidence to complete other one?

    No, they will do the one you pay them to do.
    It sounds like you don’t know exactly wht to do here and tbh a professional would be your best bet. For a couple of hundred euro, which is deductible.

    You also have to keep running track of your items that can be offset at 12.5% per year instead of completely written off wholey each year.


  • Options
    #14
    Edgware
    Registered Users Posts: 5,874 ✭✭✭Edgware


    madwidow wrote: »
    Rental income will be declared 1st time this year.
    Im a paye for primary income and 5k are on the higher tax band already?

    If you have rented for four months only you may enough expenses to minimise the tax. You will have to declare still and be liable for preliminary tax for 2019.
    There was a recommendation from the Courts that the LPT was to be an allowable expense but the Department of Finance have appealed it. I think it is allowable for commercial properties but not residential which is unusual in so much as that renting property is a business in itself


  • Options
    #15
    Happy4all
    Closed Accounts Posts: 2,089 ✭✭✭Happy4all


    Bubbaclaus wrote: »
    The threshold is 0 if you didn't code an estimate of your additional income onto your tax credit cert for that year.

    Filed many returns where not coded on the basis of unearned income threshold. Always processed by revenue and tax collected through reduction of future tax credits.


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    #16
    Bubbaclaus
    Registered Users Posts: 4,461 ✭✭✭Bubbaclaus


    Happy4all wrote: »
    Filed many returns where not coded on the basis of unearned income threshold. Always processed by revenue and tax collected through reduction of future tax credits.

    Very good. That still doesn't make it correct. You are considered a self-assessed individual that is currently failing to file self-assessed returns. And failing to pay the 4% PRSI that applies to self assessed individuals that doesn't apply to Form 12s.


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    #17
    madwidow
    Registered Users Posts: 46 ✭madwidow


    kceire wrote: »
    No, they will do the one you pay them to do.
    It sounds like you don’t know exactly wht to do here and tbh a professional would be your best bet. For a couple of hundred euro, which is deductible.

    You also have to keep running track of your items that can be offset at 12.5% per year instead of completely written off wholey each year.

    You are correct here, no clue really but die hard DYI habits kicking in...
    Income for 2017 would be 3300, 2018 - 13700 due to arrears but that puts me under the 14K tax free. 2019 is the year when im over threshhold for tax..


  • Options
    #18
    Bubbaclaus
    Registered Users Posts: 4,461 ✭✭✭Bubbaclaus


    madwidow wrote: »
    You are correct here, no clue really but die hard DYI habits kicking in...
    Income for 2017 would be 3300, 2018 - 13700 due to arrears but that puts me under the 14K tax free. 2019 is the year when im over threshhold for tax..

    If you are availing of rent a room relief then why are you calculating deductions and tax? You just need to throw the income figure in the box and tick the question saying you are claiming.


  • Options
    #19
    madwidow
    Registered Users Posts: 46 ✭madwidow


    Edgware wrote: »
    If you have rented for four months only you may enough expenses to minimise the tax. You will have to declare still and be liable for preliminary tax for 2019.
    There was a recommendation from the Courts that the LPT was to be an allowable expense but the Department of Finance have appealed it. I think it is allowable for commercial properties but not residential which is unusual in so much as that renting property is a business in itself

    Rented since 2017 so accoring to revenue i need to complete declaration for that in 2018? And pay preliminary for 2018?
    Its a shame for LPT, missed the boat there and its deductable at sourse


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    #20
    madwidow
    Registered Users Posts: 46 ✭madwidow


    Bubbaclaus wrote: »
    If you are availing of rent a room relief then why are you calculating deductions and tax? You just need to throw the income figure in the box and tick the question saying you are claiming.

    Technically it was a full house rent since i moved. I know the numbers are low, cheap rent one might say. It was not by choice so the numbers are quite low for 2017 and gonna be for this year too as the full payment has been sorted recently due some lost applications. I just need to pick someone brains about it. Full Tax and all will be in 2019.
    Is that staight forward for under 14k rental income?


  • Options
    #21
    BOHSBOHS
    Registered Users Posts: 710 ✭✭✭BOHSBOHS


    You cannot claim rentaroom relief (14k)if you do not live in the house!


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  • Options
    #22
    madwidow
    Registered Users Posts: 46 ✭madwidow


    BOHSBOHS wrote: »
    You cannot claim rentaroom relief (14k)if you do not live in the house!

    Very true


  • Options
    #23
    Gumbo
    Moderators, Society & Culture Moderators Posts: 39,339 Mod ✭✭✭✭Gumbo


    madwidow wrote: »
    You are correct here, no clue really but die hard DYI habits kicking in...
    Income for 2017 would be 3300, 2018 - 13700 due to arrears but that puts me under the 14K tax free. 2019 is the year when im over threshhold for tax..

    And this is another example on why you should swallow your pride and go to a professional for such a low cost.

    There is no 14k threshold, you are confusing totally different pieces of legislation.


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    #24
    madwidow
    Registered Users Posts: 46 ✭madwidow


    kceire wrote: »
    And this is another example on why you should swallow your pride and go to a professional for such a low cost.

    There is no 14k threshold, you are confusing totally different pieces of legislation.

    Its not a pride thing. But id like to be conscious of what it envolves generally, savings gone trying to pay rent and morgage and by no means am i trying to avoid tax and like to save when and when i can


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    #25
    Caranica
    Registered Users Posts: 10,117 ✭✭✭✭Caranica


    madwidow wrote: »
    Its not a pride thing. But id like to be conscious of what it envolves generally, savings gone trying to pay rent and morgage and by no means am i trying to avoid tax and like to save when and when i can

    Pay an accountant in year one and use their return as a template to follow for future years.


  • Options
    #26
    madwidow
    Registered Users Posts: 46 ✭madwidow


    Caranica wrote: »
    Pay an accountant in year one and use their return as a template to follow for future years.

    That was something i ve been considering. Whats generally best online accountants, seen a good few offering the service or face to face?
    Online have fee different tiers based on what u d like


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