Declare rental income when non resident in the state

pasquale83

Folks,

I'm just moving out of the state and I own a property I'd like to rent out.

I'been thorough the Revenue website already and understood that the tenant will deduct the standard rate off the monthly rent and they should issues a form R185. I can then claim a tax credit equal to the taxes deducted.

I am missing a couple of steps:
- is the tenant paying the tax deducted directly to the Revenue?
- how can I claim any deductions (mortgage for example)?

Thank you for your help!

nompere

pasquale83 wrote: »

Folks,


- is the tenant paying the tax deducted directly to the Revenue?
- how can I claim any deductions (mortgage for example)?

Thank you for your help!

1) Yes
2) By filing a tax return - which is mandatory, anyway.

HcksawJimDuggan

pasquale83 wrote: »

Folks,

I'm just moving out of the state and I own a property I'd like to rent out.

I'been thorough the Revenue website already and understood that the tenant will deduct the standard rate off the monthly rent and they should issues a form R185. I can then claim a tax credit equal to the taxes deducted.

I am missing a couple of steps:
- is the tenant paying the tax deducted directly to the Revenue?
- how can I claim any deductions (mortgage for example)?

Thank you for your help!

Yes the tenant will pay the tax directly to Revenue.

You will still be required to file a form 11 each year on which you can claim rental expenses (portion of mortgage interest, repairs etc.). You will get a credit for the taxes deducted by the tenant on the form 11 also.

pasquale83

nompere wrote: »

1) Yes
2) By filing a tax return - which is mandatory, anyway.

OK thank you for the quick reply.

Can't find on the Revenue website the details of how the tenant can pay taxes to the revenue. Do you have any links?

pasquale83

HcksawJimDuggan wrote: »

Yes the tenant will pay the tax directly to Revenue.

You will still be required to file a form 11 each year on which you can claim rental expenses (portion of mortgage interest, repairs etc.). You will get a credit for the taxes deducted by the tenant on the form 11 also.

Thank you. So will I get cash back from Revenue then?

CIARAN_BOYLE

pasquale83 wrote: »

OK thank you for the quick reply.

Can't find on the Revenue website the details of how the tenant can pay taxes to the revenue. Do you have any links?

http://www.revenue.ie/en/self-assessment-and-self-employment/retainable-charge/index.aspx

mrslancaster

pasquale83 wrote: »

OK thank you for the quick reply.

Can't find on the Revenue website the details of how the tenant can pay taxes to the revenue. Do you have any links?

What happens if the 20% is not paid over to Revenue?

murphaph

pasquale83 wrote: »

Thank you. So will I get cash back from Revenue then?

Yes, if it's your only source of income taxable in Ireland then you'll likely be due a refund of tax paid unless the rent is like 3 or 4k a month and pushes you well into the top rate of tax.

BrokenArrows

mrslancaster wrote: »

What happens if the 20% is not paid over to Revenue?

The tenant is liable for the money. If they dont pay it then revenue will come after them.

To avoid future complication the landlord should seek proof of tax payments every month and get written proof that the Tenant is aware of his obligation to pay this every month. ie. Put it in the tenancy agreement.

Graham

murphaph wrote: »

Yes, if it's your only source of income taxable in Ireland then you'll likely be due a refund of tax paid unless the rent is like 3 or 4k a month and pushes you well into the top rate of tax.

What tax free allowances does a non-resident get?

HcksawJimDuggan

Graham wrote: »

What tax free allowances does a non-resident get?

Zero Tax Credits

CIARAN_BOYLE

mrslancaster wrote: »

What happens if the 20% is not paid over to Revenue?

It depends. did the Tennant give you a form to verify that they paid it over (r185) if so the Tennant is liable.

murphaph

Graham wrote: »

What tax free allowances does a non-resident get?

Whilst not a tax free allowance the OP mentioned a mortgage so that would immediately reduce his taxable income. The other usual allowances like repairs, insurance etc. will also reduce the taxable income.

A non-resident is entitled to a proportion of all their allowances. It's calculated based on the proportion of your Irish income to your total worldwide income. If your Irish income forms 75% or more of your total worldwide income, you can claim 100% of your allowances.

A non-resident pays no PRSI either, so a tax refund is highly likely given all of the above if the rent is less than the threshold for the top rate of income tax.

Edit: the 75% rule is only available for those resident in another EU member state. See http://www.irishstatutebook.ie/eli/1997/act/39/section/1032/enacted/en/html

murphaph

HcksawJimDuggan wrote: »

Zero Tax Credits

This is incorrect.
http://www.irishstatutebook.ie/eli/1997/act/39/section/1032/enacted/en/html

I use ROS and it correctly gives me a portion of the allowances to which I'm entitled.

TiNcAn

murphaph wrote: »

Graham wrote: »

What tax free allowances does a non-resident get?

Whilst not a tax free allowance the OP mentioned a mortgage so that would immediately reduce his taxable income. The other usual allowances like repairs, insurance etc. will also reduce the taxable income.

A non-resident is entitled to a proportion of all their allowances. It's calculated based on the proportion of your Irish income to your total worldwide income. If your Irish income forms 75% or more of your total worldwide income, you can claim 100% of your allowances.

A non-resident pays no PRSI either, so a tax refund is highly likely given all of the above if the rent is less than the threshold for the top rate of income tax.

Edit: the 75% rule is only available for those resident in another EU member state. See http://www.irishstatutebook.ie/eli/1997/act/39/section/1032/enacted/en/html

Would you mind elaborating a little bit more on this please. 
For example, as a non-resident, can 80% of mortgage interest deducted from the taxable income like a resident landlord? Or does the Irish income have to form >75% of total worldwide income for this to be allowed?
The same with repairs and insurance. Can they also be deducted from the taxable income like a resident landlord? Or only if the Irish income forms >75% of total worldwide income?

murphaph

Mortgage interest, repairs, insurance etc. can of course be deducted in exactly the same manner as for residents to calculate taxable income.

The apportionment relative to worldwide income relates to tax credits only.

TiNcAn

Thanks murphaph. You're a star!

I am just curious, did you find it easy filling a tax return yourself or did you get the services of an accountant to help?

murphaph

TiNcAn wrote: »

Thanks murphaph. You're a star!

I am just curious, did you find it easy filling a tax return yourself or did you get the services of an accountant to help?

I would suggest using an accountant for your first return if you're not confident and then take it from there yourself in subsequent years. Unless something unusual happens it's repetitive stuff. Once you enter in the correct data into ROS you can't go wrong.

The first year could be considered tricky as you need a reasonable starting value for your fixtures and fittings and with a used property you won't have receipts for everything.

I believe revenue published some guidance on that. They do have a flyer on the subject of rental income. Maybe read that first.

Don't just guess things. If you're genuinely not sure, seek clarification but remember... it's always your responsibility to submit an accurate tax return, even if you have an accountant, so you should be checking what is submitted and understand it!

pasquale83

murphaph wrote: »

Mortgage interest, repairs, insurance etc. can of course be deducted in exactly the same manner as for residents to calculate taxable income.

The apportionment relative to worldwide income relates to tax credits only.

I have checked out my annual mortgage interests and they will cover the whole amount of taxes due on the rental income. Is that possible?

Michael D Not Higgins

As with previous queries you've had about tax and renting, I suggest you speak to a tax professional.