NON-RESIDENT LANDLORDS: Why is tax SO much higher?!

Dubliner1975

So it turns out I didn't pay enough tax for 2014 and 2015 (Revenue thought I was a resident when in fact I was a non-resident). Now that they know I was a non-resident they have recently amended my tax notice and I now owe them an extra €1650 for 2014/2015 each. This means my total income tax for 2014 and 2015 will  come to about €3000 each. This is more than twice as much as what I paid when they thought I was a resident.

WHY has my income tax been yanked up so high just because I'm a non-resident?? 

Revenue knew I wasn't living in Ireland as my address had changed and I even said so on the tax return form so WTF? In 2015 I earned about €12,000 and they wanna tax me €3000?! That's 25%! Is that right? I have no other income in Ireland and in the UK I don't even have a FT job.

I get paid about €12,000 per year for my property from the tenant. €10,000 of that goes each year to mortgage, LPT, life assurance, management fee and repairs. If they want that much tax, I'll have nothing left!

Humour Me

I imagine the €1650 relates to your personal tax credit. As you are no longer a tax resident you have lost the entitlement.

Dubliner1975

So what does that mean exactly? What's a personal tax credit? I'm not entitled to it but why am I paying so much for tax when I'm not even in the country to use the amenities? I haven't a clue how all this tax stuff works or the jargon.

NinetyTwoTeam

You are using an amenity - the tenant.
And as you don't live here you are avoiding a host of other taxes such as your income tax from employment, vat on items purchased, and potentially all the income from your rental property could be going elsewhere also, so the higher rate is applied to offset that. Would think that would be obvious.

Dubliner1975

Well at this rate its pointless renting my flat out with these high taxes because I'm not even breaking even. In fact I'm losing money, not making it.

Humour Me

if you have a read of the Accommodation forum you will see that a lot of single property landlords are selling up as costs are increasing and rents are being restricted.

Have you ever had a tax advisor/ accountant go through your records to confirm you are claiming relief for the costs you are incurring?

CIARAN_BOYLE

Dubliner1975 wrote: »

Well at this rate its pointless renting my flat out with these high taxes because I'm not even breaking even. In fact I'm losing money, not making it.

Some of the money going towards the mortgage is capital. You feel like you are losing money but you are buying your apartment a bit each year.

On your tax return there is a box to tick to regarding your residency status. If you are in the country over a certain number of days you are resident no matter what your address is. Your address changing doesn't mean your residency changed.

Anyway it's worth notting that non resident persons can claim a portion of tax credits based on their Irish income as a % of world wide income. You may wish to consult an advisor if you wish to claim this.

relax carry on

Dubliner1975 wrote: »

So what does that mean exactly? What's a personal tax credit? I'm not entitled to it but why am I paying so much for tax when I'm not even in the country to use the amenities? I haven't a clue how all this tax stuff works or the jargon.

You admit you haven't a clue how this tax stuff works. You filed incorrect tax returns. Have you spoken to a professional to see if your returns are in fact correct.

Dubliner1975

Humour Me wrote: »

if Have you ever had a tax advisor/ accountant go through your records to confirm you are claiming relief for the costs you are incurring?

No, I haven't. And I'm not claiming any relief at all. Not sure what good it would do if I had someone confirm it with Revenue either.
Looks like I'll have to increase the rent or give up the flat and sell.

Dubliner1975

relax carry on wrote: »

You admit you haven't a clue how this tax stuff works. You filed incorrect tax returns. Have you spoken to a professional to see if your returns are in fact correct.

No, I've not sought out a professional as I'm not in Ireland. But even if I had filled the return in wrong, how would I convince Revenue to let me re-submit another return after so long has passed? 

I didn't realise the mortgage I was paying could be included as capital, I just added it to expenses so not sure if that would make a difference.

amcalester

It’s pretty obvious you need professional help with this.

Mrs OBumble

Dubliner1975 wrote: »

No, I've not sought out a professional as I'm not in Ireland. But even if I had filled the return in wrong, how would I convince Revenue to let me re-submit another return after so long has passed? 
.

You can still consult an Ireland based accountant - just meet them via Skype.

And revenue will let you submit a revised return for up to four years AFAIK. No convincing needed, just submit it.

bmm

amcalester wrote: »

It’s pretty obvious you need professional help with this.

Naaa ! You dont need a professional for something as straight forward as this !

Professionals will say you need a professional !

example:

Rent is 10k
Management fees: 1.5k
Repairs: .5k
Mortgage Interest: 2k ( 75% of Interest portion of repayments)
Wear & Tear Depreciation: .5k (8% of cost of fixtures and fittings)

Taxable Rent: 5.5k

Of course the professionals with their hidden agendas will try to pick holes as usual :rolleyes:

Detailed example here :: http://www.knowyourtax.ie/landlords/

bee06

bmm wrote: »

Naaa ! You dont need a professional for something as straight forward as this !

Professionals will say you need a professional !

The OP doesn’t even know what a personal tax credit is. I think professional advice in that case is well recommended. And I say that as a “non professional”.

lau1247

Dubliner1975 wrote: »

Revenue knew I wasn't living in Ireland as my address had changed and I even said so on the tax return form so WTF? In 2015 I earned about €12,000 and they wanna tax me €3000?! That's 25%! Is that right? I have no other income in Ireland and in the UK I don't even have a FT job.

I do wonder if it is to do with tenant is supposed to withhold 20% of what they pay as tax to revenue for non resident landlord. The figure appears to work out.

If OP is receiving 12000, that would suggest that is the 80% so 3000 would be the 20%. This matches what OP says.

What doesn't make sense to me is that this is supposed to apply to the tenant as the responsible person (if not mistaken) and not the landlord?? Anyway I don't know enough about it, just another thing to bring into the mix for consideration.

Lockedout2

A professional might say that the OP if domiciled in Ireland could be entitled to a portion of the personal tax credit represented by their Irish income / worldwide income.

exaisle

bmm wrote: »

Naaa ! You dont need a professional for something as straight forward as this !

Professionals will say you need a professional !

example:

Rent is 10k
Management fees: 1.5k
Repairs: .5k
Mortgage Interest: 2k ( 75% of Interest portion of repayments)
Wear & Tear Depreciation: .5k (8% of cost of fixtures and fittings)

Taxable Rent: 5.5k

Of course the professionals with their hidden agendas will try to pick holes as usual :rolleyes:

Detailed example here :: http://www.knowyourtax.ie/landlords/

Yeah...they will. Especially when you make a balls of something as simple as Wear & Tear. :rolleyes:

Also, that website you quoted belongs to...a professional...but it doesn't mention the rules that apply to non-resident landlords and this has relevance to the OP. Also...it quotes €200 (presumably PLUS VAT) for a rental account and tax return. I daresay lots of professionals would undercut that too..

From what I've read from the OP, it's clear that they could do with the services of a professional...and accountant's fees are an allowable deduction against rental income too...

Pawwed Rig

There is a section on the form that you make a declaration as to your residency status. This would seem not to have been completed. OP seems to have made a balls of his returns. This is his fault. Not sure what the rants are about

Dubliner1975

Mrs OBumble wrote: »

You can still consult an Ireland based accountant - just meet them via Skype.

And revenue will let you submit a revised return for up to four years AFAIK. No convincing needed, just submit it.

Thanks. I'll look into that and get an adviser to go through it with me.

exaisle

NinetyTwoTeam wrote: »

You are using an amenity - the tenant.
And as you don't live here you are avoiding a host of other taxes such as your income tax from employment, vat on items purchased, and potentially all the income from your rental property could be going elsewhere also, so the higher rate is applied to offset that. Would think that would be obvious.

Utter nonsense. The higher rate isn't applied. Normal rates of tax are applied and these are given as a credit in the country in which the OP lives when he makes his return there assuming there's a double taxation agreement in place.

The OP isn't avoiding any taxes at all and suggesting that he is is ludicrous.

The complication here is that the TENANT should withhold 25% of the rent and remit it to Revenue. This stands to OP's credit for when he makes a return. I dare say that if OP makes a correct return, there would most likely be a refund due out of this sum.

exaisle

Lockedout2 wrote: »

A professional might say that the OP if domiciled in Ireland could be entitled to a portion of the personal tax credit represented by their Irish income / worldwide income.

A different professional might say that an individual will not cease to be ordinarily resident until he has been non-resident for three continuous tax years....

Pawwed Rig

exaisle wrote: »

The complication here is that the TENANT should withhold 25% of the rent and remit it to Revenue. This stands to OP's credit for when he makes a return. I dare say that if OP makes a correct return, there would most likely be a refund due out of this sum.

There are very few tenants who actually do this. (20% btw)

exaisle

Pawwed Rig wrote: »

There are very few tenants who actually do this. (20% btw)

Yup...probably the same 20% that know that they're supposed to.... :-)

Bold Abdu

I'd be very surprised if your assessments are correct.

If you do nothing else, pay an advisor for at least the first year. I'd say your returns are littered with errors and omissions.

Pawwed Rig

exaisle wrote: »

Yup...probably the same 20% that know that they're supposed to.... :-)

I meant the WHT is 20% and not 25% as previous poster said.

Mr. Incognito

Probably withholding tax

Get a professional.

If you are too cheap to pay for one you will pay many many multiples of it in tax and penalties which will be affixed to your home as a charge.

Dubliner1975

Thanks guys, very useful info here. I'll be in Dublin in Jan and will meet with a tax adviser and resubmit returns.

ThumbTaxed

bmm wrote: »

Naaa ! You dont need a professional for something as straight forward as this !

Professionals will say you need a professional !

example:

Rent is 10k
Management fees: 1.5k
Repairs: .5k
Mortgage Interest: 2k ( 75% of Interest portion of repayments)
Wear & Tear Depreciation: .5k (8% of cost of fixtures and fittings)

Taxable Rent: 5.5k

Of course the professionals with their hidden agendas will try to pick holes as usual :rolleyes:

Detailed example here :: http://www.knowyourtax.ie/landlords/

Maybe you should be more professional and get the answer right?