I'm way behind on my rental income tax

lg01

I have a very small apartment in the country that I bought more than 10 years ago - but its still only worth half what I paid for it, and it costs me a few hundred a month to top up the mortgage and pay the fees etc. I wish I had never have bought but but I don't have much choice. Despite making a constant loss on it I know I still have to pay tax on the income. I had paid the tax for a few years - probably way more than I should have as I did not claim for much - but over the last few I have not done anything at all. I have no had any communication from the revenue.

I'm sure it's going to catch up with me at some stage but I want to know what the best strategy is. A friend told me they can only go back 6 years so I'm best putting money aside and waiting until I have to. Are there any other ways of offsetting losses against tax? What is the best thing to do if you are way behind on doing your taxes?

Any helpful advice appreciated. Thanks.

Mrs OBumble

Get an accountant.

You can claim 75% of the interest against your income, so may not owe as much tax as you think

barneystinson

^^^ +1

Also your friend is talking sh1te. It's 4 years, not 6 (6 is the period for which you're obliged to retain all your records).

The 4 years starts from when you've filed a return though, and critically it doesn't apply where there's reasonable grounds for the Inspector to believe there's been fraud or neglect on your part... so if you haven't filed returns or you've omitted something material from them, no time limit applies.

J.Ryan

barneystinson wrote: »

^^^ +1

Also your friend is talking sh1te. It's 4 years, not 6 (6 is the period for which you're obliged to retain all your records).

The 4 years starts from when you've filed a return though, and critically it doesn't apply where there's reasonable grounds for the Inspector to believe there's been fraud or neglect on your part... so if you haven't filed returns or you've omitted something material from them, no time limit applies.

The Tax payer hasn't filed the returns, so no time limit applies in this case.

If Revenue write to you to start an audit, you will be lucky to get away with 30% penalties for every return outstanding aswell as interest. the bad news is that an overall penalty of over 15% will lead to you being published in the defaulters list.

Please see an accountant or notify Revenue yourself (at least then you won't be published).

You may be able to get an installment based agreement by coming forward rather than waiting for them.

Also, the mortgage interest is only allowable if you have paid your LPT on the property, so please do so also.

thegolfer

Ensure that you have the prtb registration, as Revenue will 100% look for this, it also ensures that you can take a tax deduction for the mortgage interest.

I've had a few of these over the years, and Revenue sometimes elevate to an audit case depending on the liabilities involved.

Rental income is ringfenced for tax purposes, and any losses can only be utilised for rental profits, ie cannot be offset against other incomes.