Tax on rental income and profit - non-resident

Jude13

Hypotheicla Q here.

I am Irish but a non resident living abroad. If I were to purchase a BTL in Ireland what tax would I be liable for?

Thanks in advance,

newacc2015

Jude13 wrote: »

Hypotheicla Q here.

I am Irish but a non resident living abroad. If I were to purchase a BTL in Ireland what tax would I be liable for?

Thanks in advance,

Your tenant is supposed withhold 20% of their rent and hand it to Revenue. It is the law and technically Revenue could go after the tenant, if they didn't' do it. But Revenue hasn't done that in well over a decade.

You can nominate an agent to collect your rent and be responsible for you being tax compliant and therefore you don't have to worry about the withholding tax. You pay LPT etc on the property.

Very few banks give mortgages to non-residents and the ones that do require you to have a decent income ie in excess of around €75k

Jude13

Thanks for that, the mortgage isn't an issue thankfully. Th below may sound silly.

If I have a mortgage of say EU 1,000 and rental income of 1,400 (I wish!) what would be the tax I am liable for as a non resident.

Strettie11

Revenue Tax on Rental Income Guide

Good guide here from revenue

irish_investr

don't you also need to check with the tax authority in your domicile country?
and whether the property is private residence or investment property.
My example: live in 1 EU country with property in 2 other EU countries. One property is investment and one is my private residence. Both rented out.

1. my private residence: have mortgage interest relief, and a buffer of €4k per year ie can earn up to 4k without paying tax. On top of that, 20% of the rental income is not taxed. the remainder taxed at 20%. Have access to grants and subsidies FROM the country I live, to use in the country where my property is. General maintenance and repairs not deductible.

2. investment property: no mortgage relief but losses and investments/renovations etc are deductible against future gains. no access to grants and schemes. General maintenance and repairs deductible (incl insurance, utilities if applicable such as a landlord meter for hallway). As is depreciation. Any profits left are taxed as income.

Property is quite tricky. As mentioned above, Irish revenue requires the "20% rule" be applied, or agent (an agent/manager will cost about 8% of the rent). In that case, the tenant gives you a paper at the end of the year saying how much he paid to revenue on your behalf. You send it to revenue and get a kind of tax clearance cert back, which you then submit to the tax authority in the country where you live. If that country has an agreement with ireland, they will take the prepaid 20% into consideration.

The criteria for private residence: you intend to live there in the near future. Where I am, there is a guideline of "up to 3 years". After the 3 yrs they will tax it as an investment property. If mortgage is BTL, my guess is that this would be seen as investment property from day 1.

Jude13

Great post Irish_in, I am in the UAE/KSA so I do not believe that there is any tax issues this end. The property will purely be for investment and maybe 15+ years down the road for my kid to use if they got to college in Ireland.

Therefore I guess if I purchase a property I would be reliant on the person renting to pay 20% of the rent to the revenue. If they do not, the tenant is liable? Not sure I would get a tenant to take that risk or maybe they won't care.

newacc2015

Jude13 wrote: »

Therefore I guess if I purchase a property I would be reliant on the person renting to pay 20% of the rent to the revenue. If they do not, the tenant is liable? Not sure I would get a tenant to take that risk or maybe they won't care.

By law they are responsible and liable to hand it over to Revenue. Revenue hasn't enforced it in years though(I think the last case they enforced was 1997/1999). You can get a family member/accountant to sign a form stating they will ensure you are tax compliant. Then the 20% isnt deducted and the tenant isnt liable.

If I were you, I would buy into a student accommodation development. Most are legally license agreement, meaning there is no risk of non-paying tenant. They arent covered by the new control laws AFAIK as they aren't covered by tenancy law. They generally have a management company who can collect the rent for you etc. Personally I wouldn't bother with handing over 15% to get someone to do a job that it is little more than a twice a year inspection and looking at the account balance

They have a lower yield though.

Jude13

thanks for that, never heard of a student accommodation development as an option, are they on campus, whats the craic with them in relation to selling in the future etc?