Landlords - have you ever been audited?

sk8board

I’ve been a LL for 15 years and full-time for the past 3.
I’ve got all the receipts matching every annual tax return, fine but I’m wondering if any of you have ever been asked to actually produce receipts or show anything?
Today I was replacing the detergent dispenser in the middle of the door on a dishwasher and let’s face it, I’m never going to be asked to show it to the tax man

Gumbo

sk8board wrote: »

I’ve been a LL for 15 years and full-time for the past 3.
I’ve got all the receipts matching every annual tax return, fine but I’m wondering if any of you have ever been asked to actually produce receipts or show anything?
Today I was replacing the detergent dispenser in the middle of the door on a dishwasher and let’s face it, I’m never going to be asked to show it to the tax man

I haven’t been audited as a LL as of yet.
But like you, I have every receipt in a folder in chronological order by year and an excel sheet that I type out with every expense and income.

Should I get audited then I’m happy and comfortable that I can demonstrate every cost.

The big thing now is preliminary taxes. Technically you have to pay them as a LL but I know many that don’t. I also know from my accountant /tax consultant mate that does my books that h is seeing a large increase in pre lim tax audits and subsequent penalties added.

sk8board

kceire wrote: »

I haven’t been audited as a LL as of yet.
But like you, I have every receipt in a folder in chronological order by year and an excellent sheet that I type out with every expense and income.

Should I get audited then I’m happy and comfortable that I can demonstrate every cost.

The big thing now is preliminary taxes. Technically you have to pay them as a LL but I know many that don’t. I also know from my accountant /tax consultant mate that does my books that h is seeing a large increase in pre lim tax audits and subsequent penalties added.

Specifically LLs being audited for prelim, or just general taxpayers?

Admittedly I don’t do the prelim either, for no real reason, the funds are unusually in a DEGIRO account. Will consider it more this Oct.

Edit: btw that’s a great autocorrect - I also have an excellent sheet

Gumbo

sk8board wrote: »

Specifically LLs being audited for prelim, or just general taxpayers?

Admittedly I don’t do the prelim either, for no real reason, the funds are unusually in a DEGIRO account. Will consider it more this Oct.

Edit: btw that’s a great autocorrect - I also have an excellent sheet

He didn’t specifically say, but he mentioned that it was people with a specific tax liability of around 11k. Basically he hasn’t seen one on anyone that owed less.....yet.

But that figure would catch anyone with more than one property. My liability would be half that with one.

Samuel T. Cogley

I believe too much in jinxing myself to post here :pac: I pay my prelim tax though despite some people telling me I'm mad to do so.

Gumbo

Samuel T. Cogley wrote: »

I believe too much in jinxing myself to post here :pac: I pay my prelim tax though despite some people telling me I'm mad to do so.

I'll probably get audited tomorrow!

Claw Hammer

I know some landlords who have been audited. The trigger seems to have been a lot of activity i.e. buying and selling a number of properties within a short period of time.the other trigger is if there is a lot of interest being deducted and it doesn't match the registration in the RTB. Generally speaking, if there is good record keeping and transparency and the overall deductions claimed are reasonable they don't drill into small deductions. My own accountant noticed a flurry of demands or prelim about 2 years ago. it seem they are picking on a target group every so often and pressurising them. He noticed the liabilities were all around the same figure as well.

CIARAN_BOYLE

I strongly believe that the majority of revenue audits are prompted.

I have say in more audits where the revenue auditor has been able to give a reason for the audit than where they haven't.

In the case of landlords always remember revenue know where you own property. They can figure out what the average income in that area is and what a normal expense would be.

If you are outside 50% either way (ie outside between half and 1.5 times the normal) revenue are a lot more likely to call you to audit.

lawrencesummers

Was audited a while back, about 7 years ago. Everything was in order, but they were more worried about the MEd1 returns than anything else. They seemed to have a big focus on that for whatever reason. I had to send off all the receipts for the year in question and they only came back with question on the medical stuff.

Only dawned on me afterwards that I hadn’t kept copies of receipts before I sent them, but there was no issue I got them all back.

Accountant reckoned it was just random selection.

Claw Hammer

A relatively small percentage of revenue audits are random. There is usually a pattern calling for an explanation. The revenue have a lot of data and are increasingly able to interrogate it to produce audit leads.

the_syco

sk8board wrote: »

I’ve got all the receipts matching every annual tax return, fine but I’m wondering if any of you have ever been asked to actually produce receipts or show anything?

If you don't do it already, scan till receipts to your computer. The writing fades on some receipts (mainly thermal paper receipts), making them blank pieces of paper after a while.

Gumbo

the_syco wrote: »

If you don't do it already, scan till receipts to your computer. The writing fades on some receipts (mainly thermal paper receipts), making them blank pieces of paper after a while.

This is something I was planning to adopt for 2020 onwards. Digital
Record of receipts too.

sk8board

lawrencesummers wrote: »

Was audited a while back, about 7 years ago.
SNIP
I had to send off all the receipts for the year in question.
SNIP
Only dawned on me afterwards that I hadn’t kept copies of receipts before I sent them, but there was no issue I got them all back.

interesting, so its not an appointment as such, they are simply asking you to post them the receipts. No bother if thats the case.
As I said above, I figured that while someone can ask me to produce receipts, no-one will ever ask me to actually show them which house I used that tube of silicon in!

Claw Hammer

sk8board wrote: »

interesting, so its not an appointment as such, they are simply asking you to post them the receipts. No bother if thats the case.
As I said above, I figured that while someone can ask me to produce receipts, no-one will ever ask me to actually show them which house I used that tube of silicon in!

I know a landlord who was audited. He had a number of properties. The tax inspector was happy with the books but asked to see one of the properties at random. There was nothing wrong but there was information she was trying to verify.