Renting out apartment and tax.

mickmac76

Hi


I'm going to start renting out my apartment this year and I just have a few questions for other landlords about the taxes on rental income.



First is it advisable to get an accountant to do your tax return each year and how much would you expect to pay for them to look after your taxes for one apartment.

If I start renting out the apartment this year when do I pay the tax? Would it be due next year as I don't know how much I will receive in rent until the year is up. Is the tax due at the start of the year?

Finally can I claim the management fee for the apartment off the tax due.



Thanks for any advice.

ted1

Don’t get an accountant. It’ll only cost you and many don’t know who to work the system. Look up the revenue website all the info is there

Gumbo

mickmac76 wrote: »

Hi


I'm going to start renting out my apartment this year and I just have a few questions for other landlords about the taxes on rental income.



First is it advisable to get an accountant to do your tax return each year and how much would you expect to pay for them to look after your taxes for one apartment.

If I start renting out the apartment this year when do I pay the tax? Would it be due next year as I don't know how much I will receive in rent until the year is up. Is the tax due at the start of the year?

Finally can I claim the management fee for the apartment off the tax due.



Thanks for any advice.

Keep every receipt.
Accountant is usually about €250 and their fee is 100% tax deductible so at the very least get one for the first year or h til you are comfortable doing your own return.

If you rent out any time this year, the tax is due by end of October next year.

Samuel T. Cogley

You need a full 12 months so you don't need to pay until next year BUT you then also have to pay preliminary tax for the upcoming year so be prepared for the double whammy.

Grumpypants

You don't need an accountant a good excel file will keep track of everything for you. And you can use revenue onlin to pay additional PAYE income, that is very easy to use and it does the work for you. You can even set it up to have them take a little each month for 2019.

It is basically

Rental income in.

Then subtract allowable expenses.

Ie 75% of the interest portion of your mortgage payment.
Maintenance (cost to paint or clear gutters etc).
Replacing washining machines/dishwashers etc
Other allowable costs (check revenue website for the list).
You can also deduct a capital depreciation cost. Work out how much you spent doing up the apartment. Then you deduct 12% a year from your income for 8 years.

This figure is your "profit" and that's what is taxable. Depending on your PAYE income you will pay 20/40% of that. Plus USC and PRSI.


If you start renting this year you pay in 2019. You will also have a good idea what 2019 will cost you and can start paying that right away month by month by reducing your tax credits so you spread it out over the whole year. That way you don't really notice it and you don't get hit with a bill at the end of the year.

Gumbo

Has the interest portion not increased to 80%?
Also it can be 100% in the case of a tenant who is in receipt of any form of social payment.

Fol20

I pay about 400 for my accountant and since it’s all tax deductible I think it’s worth it. It’s always good to make sure your ducks are in a row with revenue so it’s worth it’s weight in gold.

If you have never let property before and don’t know rental legislation it maybe advisable to use an agent to do it for you. Their fee for managing places can vary between 6-10pc per month not including any maintenance that might come. It might sound like a lot but as a landlord everything is geared to protect tenants and if you do something wrong, you can open yourself up to litigation or if you have a tenant that knows how to play the game. It can make your life hell.if it is one rental and your not too interested in it. Give it to an agent and leave all your attention to your day job. This is also tax deductible anyway

Fol20

Grumpypants wrote: »

You don't need an accountant a good excel file will keep track of everything for you. And you can use revenue onlin to pay additional PAYE income, that is very easy to use and it does the work for you. You can even set it up to have them take a little each month for 2019.

It is basically

Rental income in.

Then subtract allowable expenses.

Ie 75% of the interest portion of your mortgage payment.
Maintenance (cost to paint or clear gutters etc).
Replacing washining machines/dishwashers etc
Other allowable costs (check revenue website for the list).
You can also deduct a capital depreciation cost. Work out how much you spent doing up the apartment. Then you deduct 12% a year from your income for 8 years.

This figure is your "profit" and that's what is taxable. Depending on your PAYE income you will pay 20/40% of that. Plus USC and PRSI.


If you start renting this year you pay in 2019. You will also have a good idea what 2019 will cost you and can start paying that right away month by month by reducing your tax credits so you spread it out over the whole year. That way you don't really notice it and you don't get hit with a bill at the end of the year.

Just to correct some facts about the above post. The mortgage interest is deductible at 85pc for 2018 going up by 5pc every year until it reaches 100pc again.

USC is deducted before capital allowance are applied so it can change your figures slightly if you had a large capital expense for the year.

Capital allowances are at 12.5pc over 8 years also.

Yes you are right that you could do it yourself but I personally prefer having someone in between myself and revenue so they can assess everything I’m doing and giving me some tax advice at the same time.

Gumbo

Fol20 wrote: »

Just to correct some facts about the above post. The mortgage interest is deductible at 85pc for 2018 going up by 5pc every year until it reaches 100pc again.

USC is deducted before capital allowance are applied so it can change your figures slightly if you had a large capital expense for the year.

Capital allowances are at 12.5pc over 8 years also.

Yes you are right that you could do it yourself but I personally prefer having someone in between myself and revenue so they can assess everything I’m doing and giving me some tax advice at the same time.

OP, this is exactly why you should get an accountant whose fee is fully tax deductible.

Caranica

Grumpypants wrote: »

You can also deduct a capital depreciation cost. Work out how much you spent doing up the apartment. Then you deduct 12% a year from your income for 8 years.

This is misleading. Pre-rental decoration or renovation is not deductible.

OP definitely get an accountant for the first year. As others have pointed out, it is fully tax deductible. Make sure you get copies of all the documentation they submit and use it as a DIY template for future years.

ted1

kceire wrote: »

Fol20 wrote: »

Just to correct some facts about the above post. The mortgage interest is deductible at 85pc for 2018 going up by 5pc every year until it reaches 100pc again.

USC is deducted before capital allowance are applied so it can change your figures slightly if you had a large capital expense for the year.

Capital allowances are at 12.5pc over 8 years also.

Yes you are right that you could do it yourself but I personally prefer having someone in between myself and revenue so they can assess everything I’m doing and giving me some tax advice at the same time.

OP, this is exactly why you should get an accountant whose fee is fully tax deductible.

An accountant agreed with the revenue that I owed them 37,000. A few minutes reading their website and I managed to get it reversed so they owed me money.

I stand by mr recommendation. As to not use them

Also agents do toss all standard leases are available from the prtb site.

Fol20

ted1 wrote: »

An accountant agreed with the revenue that I owed them 37,000. A few minutes reading their website and I managed to get it reversed so they owed me money.

I stand by mr recommendation. As to not use them

Also agents do toss all standard leases are available from the prtb site.

At the end of the day, you still need to look out for number 1. I would change accountant then.

You are right. The amount of work they do on a regular basis can be quite limited however it sounds like you might be speaking from experience that you know the field. Like yourself, I manage my stuff however if you don’t know anything about the laws in place or how to deal with a difficult tenant paying 10pc a month might be a small price to pay for peace of mind.likewise if you don’t have contacts for the various trades and your novice in this area, just pass it off to someone else. Every week I see a dodgy tenant or ll thread about them not doing as agreed on contract. If you don’t know how to run it as a business and are not willing to put in the extra effort to research research research, pass it off to someone that knows it

Fol20

Forgot to also mention if you want to go to a further extreme, you could also check if your local council offer a long term lease where all you do is receive money in the account every month and you have no worries at all. They normally charge at least 20pc below market rate for it but again, it’s another type of thing out there that might be a good suit for you. I personally don’t do it but for some, there’s no worries and you just get the cheque every month.

banie01

Grumpypants wrote: »

You don't need an accountant a good excel file will keep track of everything for you.

Is there any freely available spreadsheets for this?

ted1

banie01 wrote: »

Grumpypants wrote: »

You don't need an accountant a good excel file will keep track of everything for you.

Is there any freely available spreadsheets for this?

Excel.
Money received in 1 column , money out in another.
End of year go to revenue website look up what receipts are expenses and include 12% depreciation for fittings and furniture then complete your form 12 online

Fian

Most important thing you can do is set aside about 45% of the rent you receive to be there for meeting your tax bill. Don't spend it as it comes in.

I have 2 rentals, rent from one of them goes into a separate account and sits there until November tax bill rolls around. Rent from the other goes into my current account, to go towards the mortgages.

Do not think that you will be able to fund the mortgage + your tax bill from your rent, that is entirely unrealistic, you will have to subsidise from other income. Think of property investment as a saving scheme rather than an income stream.

I do my own taxes but i have a relative in the revenue commissioners who helped me set up my spreadsheet to record everything in the beginning.

ouxbbkqtswdfaw

Better off with a good accountant.