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Tax on rental income: joint mortgage, one party non-resident in Ireland

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  • 20-08-2018 8:37pm
    #1
    InPsyDer
    Registered Users Posts: 62 ✭✭


    I'm interested to find out how tax on rental income would charged in a case where I'd be on a joint mortgage, living in the property and renting out rooms (over the 14k tax exemption threshold), but the other party on the mortgage is going travelling for the next few years. I know the tax obligation for a non-resident landlord is 20% on rent and mine I think goes on the higher end of income band so 40%. I dont know how it could be split this way though so we each pay what we are obliged to and I am really struggling to find info online in this kind of scenario! If it's something I'd have to get into with an accountant that's fine, just trying here first in case anyone knows more about rental taxation than I do! (wouldn't be hard!) :-P


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    #2
    Gumbo
    Moderators, Society & Culture Moderators Posts: 39,335 Mod ✭✭✭✭Gumbo


    Get accountant.
    Profits split 50/50.
    Pay tax accordingly.


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    #3
    Baby01032012
    Registered Users Posts: 1,622 ✭✭✭Baby01032012


    It could be based on what ye both contribute to the mortgage upkeep of the property and what ye our into your tax return to revenue is who is in receipt of what.

    Why would you go over the 14k. You could claim rent a room relief on your portion of total under 14k. As for non resident you could act as agent and withhold 20%.

    However you do need to speak to an accountant who can work through the figures with ye


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    #4
    GingerLily
    Registered Users Posts: 4,767 ✭✭✭GingerLily


    InPsyDer wrote: »
    I'm interested to find out how tax on rental income would charged in a case where I'd be on a joint mortgage, living in the property and renting out rooms (over the 14k tax exemption threshold), but the other party on the mortgage is going travelling for the next few years. I know the tax obligation for a non-resident landlord is 20% on rent and mine I think goes on the higher end of income band so 40%. I dont know how it could be split this way though so we each pay what we are obliged to and I am really struggling to find info online in this kind of scenario! If it's something I'd have to get into with an accountant that's fine, just trying here first in case anyone knows more about rental taxation than I do! (wouldn't be hard!) :-P

    Do you know that you have to pay tax on the whole amount if your renting over the 14k per annum?


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    #5
    quietsailor
    Registered Users Posts: 1,428 ✭✭✭quietsailor


    If you're paying tax already in Ireland at 40% and all your credits are used up then you need to make a huge amount over the 14K to still have 14K cash-in-hand after taxes are paid. I've been in the position of renting out rooms in my house and it is more tax efficent to rent one room less and take in under 14K. Bear in mind - if you take in anything over the 14K example - 14,100 then all of it is taxed, not the excess.

    Also if you take in €13,999 in rent plus contributions towards utilities you're considered over the €14,000. ALL monies recieved from the licencee count towards the €14K


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    #6
    InPsyDer
    Registered Users Posts: 62 ✭✭InPsyDer


    Right, ok did not know that about the utilities, thank you! So I'd have to cover all of that, pity, that was one of the reasons I thought it'd be nice having tenants! Good incentive to give up useless cable package where nothing's ever on except Friends anyway!

    It looks like the best way would be to stay under the 14k alright. I don't want to go into this if it ends up being a stretch financially so just trying to understand all the ins and outs with tax etc to make a good decision.


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    #7
    InPsyDer
    Registered Users Posts: 62 ✭✭InPsyDer


    Baby01032012 wrote: »
    It could be based on what ye both contribute to the mortgage upkeep of the property and what ye our into your tax return to revenue is who is in receipt of what.

    Why would you go over the 14k. You could claim rent a room relief on your portion of total under 14k. As for non resident you could act as agent and withhold 20%.

    This is probably such a stupid question, but if we've agreed the non-resident party is only to input a third on the mortgage repayments (due to him already contributing much more than I will be initially) does that in any way lesson how much of the rental income he must pay tax on? I don't want him to have pay 20% on half the rental income when he owes much less on the asset, so hoping I can find a fair way to navigate this! Super new to all of this, sorry!


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