Calculating Tax on Rental

So he doesn’t want to subsidise the house but is happy for the rest of us to subsidise by not paying the tax due on the rental income? And now he’s eyeing up getting some HAP for the house and is half thinking of going legit to get the hap as well?

Tell the miserable fcuker to go pay an accountant.

Well he isn't really losing out by 'undercharging' the tenant as he is pocketing the €1500 per month in full whereas a similar landlord registered for Income Tax and charging €2000 p/m isn't going to be getting anywhere near €1500 in the pocket

Considering they are in employment and possibly paying the higher rate of tax already they can expect all the rental income to be taxed at 40%

They may also want to consider filing for previous years as someone may wonder what he was doing with the property in previous years and if the tenant wants to claim HAP they may be asked where they were living previously etc

Might be in for a shock with a very large tax bill plus interest and penalties

If the house is in an RPZ the rent cannot be increased that much - that the tenancy wasn't registered doesn't mean it didn't exist.

Think ~1700 is the most it can possibly be increased to. And he can't refuse HAP on the basis of not being registered either.

Recent refusal of HAP cases have been in the 7.5k-10k compensation region.

This is some FUBAR. I like how no one adds PRSI and USC on to the 40% tax, you must all work for the Revenue 😜.

There's 'outside the lines', and there's being so far away you can't even see the line.

This is going to be very, very expensive for the landlord no matter what happens.

To be fair, it was your mate thinking he was being hard done by, while actually doing way better than others, that caused this thread.

And you did ask about tax implications. You got the answer.

No. Only interest payments can be deducted, and only for a registered tenancy.

Mortgage capital is not an allowable expense.

Or he'll get stung when he refuses HAP to the tenant, they take a case and get 10k compensation and he gets chased for unpaid registration, taxes, interest and penalties.

And that is much more likely than continuing to get away with it.

The tenant has no responsibility unless they are aware the landlord is out of the country and they are not paying an agent in Ireland; then they need to retain and submit retention tax.

Otherwise, absolutely not. The landlord is responsible for their own breaches of the law.

Considering the landlord is knowingly doing it, it could be viewed as 'deliberate behaviour' and possibly could attract a 100% penalty and interest of 0.0274% per day which is about 10% per year for 10 years..

The potential bill is eye watering

...and to add, that just refusing HAP won't stop the Revenue side of things happening; as they will absolutely notice the RTB decision on the compensation to pay the tenant for refusal; and do their own investigation then.

He can well afford to pay for an accountant. Avoiding tax while pulling in that amount of rent is an insult to law abiding landlords. He needs to make a declaration to revenue. As for wanting to add more to cover taxes etc well well.. getting the popcorn for this one...

As a general rule. Take the rent he gets and half it. That's the tax you pay.