Rental income to account abroad?

Omar205

Hi, we're moving to Belgium for job opportunity and wanted to rent our house and we were wondering what is our Irish tax situation if we get our rental income to Belgium?

Do we still have to pay tax on it? (apart from property tax) please tell me what you know.. I don't know where to start! Thanks

circular flexing

Omar205 wrote: »

Hi, we're moving to Belgium for job opportunity and wanted to rent our house and we were wondering what is our Irish tax situation if we get our rental income to Belgium?

Do we still have to pay tax on it? (apart from property tax) please tell me what you know.. I don't know where to start! Thanks

You will still have to pay income tax on the rental income but you can offset any tax you pay in Ireland against tax paid in Belgium (I believe but check to be sure). You are allowed to deduct expenses like mortgage interest, life policy premiums and repairs, but you can't deduct LPT (oddly enough)



Unless you appoint an agent in Ireland to collect rent on your behalf, then the tenants will need to pay you 80% of the rent and keep 20% to remit to Revenue. This 20% is then used to cover your tax bill every year.

Omar205

circular flexing wrote: »

You will still have to pay income tax on the rental income but you can offset any tax you pay in Ireland against tax paid in Belgium (I believe but check to be sure). You are allowed to deduct expenses like mortgage interest, life policy premiums and repairs, but you can't deduct LPT (oddly enough)



Unless you appoint an agent in Ireland to collect rent on your behalf, then the tenants will need to pay you 80% of the rent and keep 20% to remit to Revenue. This 20% is then used to cover your tax bill every year.

But how this will be assessed if the rental income will go to my bank account in Belgium? Thanks

circular flexing

Omar205 wrote: »

But how this will be assessed if the rental income will go to my bank account in Belgium? Thanks

The income will be earned in Ireland and will be assessed like any other income in Ireland.



If you are asking how will Revenue know, you have to register your tenancy with the RTB and Revenue can cross reference RTB registrations with income tax returns.

Omar205

circular flexing wrote: »

The income will be earned in Ireland and will be assessed like any other income in Ireland.



If you are asking how will Revenue know, you have to register your tenancy with the RTB and Revenue can cross reference RTB registrations with income tax returns.

Even if the rent comes to my Belgian bank account? I’m just trying to understand the whole situation here. Thanks

circular flexing

Omar205 wrote: »

Even if the rent comes to my Belgian bank account? I’m just trying to understand the whole situation here. Thanks

It only matters that the income was earned in Ireland. It doesn't matter where it ends up.

You will have to declare it and pay tax on it. If you are out of the country and not earning a wage here, the rent will not qualify for any tax after your deductibles (unless its extremely high). Pay for an accountant to do it for you, their fees are tax deductible.

To answer your real question, and I'm reading between the lines here, they will have no way of knowing that you're receiving any rent without you declaring it. If anything happens and your tenants start asking questions / talking to the right people, you're snookered and will get lashed out of it. Huge risk, to get out of paying zero tax. Not worth it, really.

Look at it this way, you have a way to get somebody else pay your mortgage while you're out of the country. The only cost to you is filling out a form online once a year. Your accountant can even do that for you.

Omar205

circular flexing wrote: »

It only matters that the income was earned in Ireland. It doesn't matter where it ends up.

Ok that makes sense now. And do you know if there’s any reliefs for about living abroad? I heard something like that but didn’t get useful info on it! Thank you!

circular flexing

Omar205 wrote: »

Ok that makes sense now. And do you know if there’s any reliefs for about living abroad? I heard something like that but didn’t get useful info on it! Thank you!

As I mentioned above you can deduct some expenses, and also you get a tax credit based on your proportion of worldwide income to rental income in Ireland (Revenue work this out). Also you don't pay PRSI and are unlikely the break the USC threshold.

Omar205

Deleted User wrote: »

You will have to declare it and pay tax on it. If you are out of the country and not earning a wage here, the rent will not qualify for any tax after your deductibles (unless its extremely high). Pay for an accountant to do it for you, their fees are tax deductible.

To answer your real question, and I'm reading between the lines here, they will have no way of knowing that you're receiving any rent without you declaring it. If anything happens and your tenants start asking questions / talking to the right people, you're snookered and will get lashed out of it. Huge risk, to get out of paying zero tax. Not worth it, really.

Look at it this way, you have a way to get somebody else pay your mortgage while you're out of the country. The only cost to you is filling out a form online once a year. Your accountant can even do that for you.

Yes exactly! Do you know how much the accountants cost? I understand if you're net income from rental below €5,000 won't be taxed (but need to submit form 12) but if above 5k then form 11 with 20% deducted - correct?

Omar205

Omar205 wrote: »

Yes exactly! Do you know how much the accountants cost? I understand if you're net income from rental below €5,000 won't be taxed (but need to submit form 12) but if above 5k then form 11 with 20% deducted - correct?

As a landlord, you are treated in terms of tax as a self-employed person. You fill out the same forms as shop owners or taxi drivers.

If you rent your house for €1,500 per month, provided you have no other income, you will be liable for the same amount of tax as somebody who works in a part-time job and earns €18,000.

The total liability would be
20% of €18,00 = €3600,
less your personal tax credit of €3300 = €300
Plus USC of about €180 = €480.

Less than a tenner a week (not accounting for any deductibles).

If you're renting for €2,000 per month, the total annual liability jumps to about €2,800. If you're not married, you can split this between you and claim you're only earning €12k each (€0 tax). If you are married, you can claim your partners TFA and the total tax would be about €1,300.

Peanuts, really when the alternative for being caught is so high. The reason people find it so restrictive is they generally have a job and a regular wage on top of the rental income. If you're earning over €34k, then all the rental income is charged at 40%+. Someone on €36k, renting for €2k per month pays €18,000 in tax to the government annually.

Think about that for a second. A person with a job and a rental property pays the govt. €15,000+ more in tax per year.

Omar205

Deleted User wrote: »

As a landlord, you are treated in terms of tax as a self-employed person. You fill out the same forms as shop owners or taxi drivers.

If you rent your house for €1,500 per month, provided you have no other income, you will be liable for the same amount of tax as somebody who works in a part-time job and earns €18,000.

The total liability would be
20% of €18,00 = €3600,
less your personal tax credit of €3300 = €300
Plus USC of about €180 = €480.

Less than a tenner a week (not accounting for any deductibles).

That's really helpful! Do you know the typical fees for accountants and property management fees? I'm just trying to calculate all the costs there to see if I'll be making profit or loss! Thanks

Omar205

Omar205 wrote: »

That's really helpful! Do you know the typical fees for accountants and property management fees? I'm just trying to calculate all the costs there to see if I'll be making profit or loss! Thanks

a) Accountants charge a much or as little as you want, depending on the amount of work you need done. Essentially, you want to only hire one at this time of year as tax is due in October. Keep all your receipts, email them all the details and get them to file the return.

b) Property management companies in Ireland are a waste of money. They don't manage anything really, and only end up acting as a go between for you and the tenants. They take phone calls, phone you up, then suggest that they'll get it sorted for you using their own tradespeople. For a higher than normal fee, plus their own healthy percentage, of course. They'll charge you a months rent for finding new tenants as well.

Much better to do your own management, all you need is to Google/phone for an electrician or plumber every now and then.

circular flexing

Deleted User wrote: »

As a landlord, you are treated in terms of tax as a self-employed person. You fill out the same forms as shop owners or taxi drivers.

If you rent your house for €1,500 per month, provided you have no other income, you will be liable for the same amount of tax as somebody who works in a part-time job and earns €18,000.

The total liability would be
20% of €18,00 = €3600,
less your personal tax credit of €3300 = €300
Plus USC of about €180 = €480.

I don't believe you get full personal credit if you are non-resident in Ireland. You will get a portion of tax credits depending on what proportion of income is earned in Ireland. Last year on my return I got tax credits of 93 euro as most of my income was earned overseas.

Interesting. I wasn't aware of that.

Is it proportional?...i.e. if you earn €18k here and €18k in Belgium do you get half your credits?

circular flexing

Deleted User wrote: »

Interesting. I wasn't aware of that.

Is it proportional?...i.e. if you earn €18k here and €18k in Belgium do you get half your credits?

It is proportional but not sure of how exactly the proportions work.