Tax Liability for Old Age Pensioner

Amy.M

my Gran is moving into a nursing home and has decided to rent out her property. I am looking after all the legal stuff and understand there may be an implication regarding income tax liability... my question is, does the tax liability extend further than a self assessment at the end of every financial year? will it impact her pension/s (state and late grandfather's pension from work) and should these be included when making the self assessment every year or is it just the income from the rental that will need to be declared?

I understand that once her total income is under €19k there should be no tax liability and that it should not affect her pension as long as it is a contributory pension. i would imagine hers is a non-contributory pension as she has never worked and was a kept woman all her life.

if anyone could enlighten me or give me any information it would be greatly appreciated!

Shane732

Amy.M wrote: »

my Gran is moving into a nursing home and has decided to rent out her property. I am looking after all the legal stuff and understand there may be an implication regarding income tax liability... my question is, does the tax liability extend further than a self assessment at the end of every financial year? will it impact her pension/s (state and late grandfather's pension from work) and should these be included when making the self assessment every year or is it just the income from the rental that will need to be declared?

I understand that once her total income is under €19k there should be no tax liability and that it should not affect her pension as long as it is a contributory pension. i would imagine hers is a non-contributory pension as she has never worked and was a kept woman all her life.

if anyone could enlighten me or give me any information it would be greatly appreciated!

Ok there's two issues here.

In relation to your grandmothers pension that is a question that would be better asked in the State Benefits forum. However, have a look at these links and see if there's anything that helps you.

http://www.welfare.ie/EN/OperationalGuidelines/pages/spc.aspx

http://www.welfare.ie/EN/OperationalGuidelines/Pages/spnc.aspx

Essentially what I think you might be referring to is that if you're mother is entitled to the non-contributory pension then any income she receives from renting her property maybe taken into account when deciding her "means". Section 2 of the Non-Contributory link above details the means test process.

The second issue is your grandmothers rental income and the tax ability there on. The rental income will be taxable under the self assessment regime. The income tax exemption for an individual over the age of 65 is €18,000. Therefore, no Income Tax liability will arise on the rental income. However, a USC liability may arise on the income. The USC limits are lower than the income tax limits - see this link http://www.revenue.ie/en/tax/it/leaflets/it1.html#section19

namenotavailablE

An additional point that might be relevant is that your grandmother can claim tax relief for the amount she pays in nursing fees to reduce her taxable income (you can do likewise if it's you who pays). See here for more details

Amy.M

thank you for taking the time to reply... much appreciated!