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Rental Income & PRSI worker

  • 22-01-2020 5:37pm
    #1
    emma_10
    Registered Users Posts: 5 ✭


    Hi,

    Can someone help with calculating rough estimates of Tax due for 2019 please.

    Both of us are PAYE workers and pay normal taxes/prsi etc. through our wages. We also own a Rental Property the rent for which is 1300 per month.

    2019 Annual Income

    Self: 55000
    Spouse: 29000
    Rent: 15600
    TOTAL INCOME: 99600

    I understand anything above 70K will be charged @ the higher rate which we were told roughly accounts to about 52% (Including USC, PRSI etc.)

    Income above 70 K = 29600
    Rental Expenses = 2800
    Income to be taxed @ 52% = 26800
    TAX DUE for 2019 = 13396.

    Doesnt make sense. We are getting annual rental income of 15600 but tax due is over 13000. Can someone explain what am I doing wrong, please.

    Thanks.


Comments

  • #2
    Thoie
    Registered Users, Registered Users 2 Posts: 6,344 ✭✭✭Thoie


    emma_10 wrote: »
    Hi,

    Can someone help with calculating rough estimates of Tax due for 2019 please.

    Both of us are PAYE workers and pay normal taxes/prsi etc. through our wages. We also own a Rental Property the rent for which is 1300 per month.

    2019 Annual Income

    Self: 55000
    Spouse: 29000
    Rent: 15600
    TOTAL INCOME: 99600

    I understand anything above 70K will be charged @ the higher rate which we were told roughly accounts to about 52% (Including USC, PRSI etc.)

    Income above 70 K = 29600
    Rental Expenses = 2800
    Income to be taxed @ 52% = 26800
    TAX DUE for 2019 = 13396.

    Doesnt make sense. We are getting annual rental income of 15600 but tax due is over 13000. Can someone explain what am I doing wrong, please.

    Thanks.

    That 26,800 includes some of your wages, which you've already paid tax on through PAYE.

    Your income without the rental is already over 70k, so for simplicity just multiply the rental income by 52%, gives you tax etc due on the rental income of €8,112.

    If those rental expenses are allowable, then you would roughly be paying
    €15,600 - €2,800 = €12,800 x 52% ==> €6,656


  • #3
    AlmightyCushion
    Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,100 Mod ✭✭✭✭AlmightyCushion


    The 13396 tax owed is based on your rental income of 15600 and also 14000 of your PAYE income. This is where you are going wrong. You pay the tax on the 14000 PAYE income through your employer so you don't need to add it in to this calculation.


  • #4
    Ronney
    Registered Users, Registered Users 2 Posts: 855 ✭✭✭Ronney


    emma_10 wrote: »
    Hi,

    Can someone help with calculating rough estimates of Tax due for 2019 please.

    Both of us are PAYE workers and pay normal taxes/prsi etc. through our wages. We also own a Rental Property the rent for which is 1300 per month.

    2019 Annual Income

    Self: 55000
    Spouse: 29000
    Rent: 15600
    TOTAL INCOME: 99600

    I understand anything above 70K will be charged @ the higher rate which we were told roughly accounts to about 52% (Including USC, PRSI etc.)

    Income above 70 K = 29600
    Rental Expenses = 2800
    Income to be taxed @ 52% = 26800
    TAX DUE for 2019 = 13396.



    Doesnt make sense. We are getting annual rental income of 15600 but tax due is over 13000. Can someone explain what am I doing wrong, please.

    Thanks.

    First step get an Accountant, There fee can be included in the Rental expenses.

    Are you Married? How are you accessed jointly or individually?

    The anything above 70K @ 52% is for an individual neither of you would hit this.

    Individually you each receive Half the rental income (or what ever split you decide)

    so you are 55K +7.8K

    You will be deducted at source by your employer for Tax on the 55k you then have to make a return on the 7.8K less expences 1.4K = 6.2K

    6.2K @ 44.5 (40% tax +4.5% usc) = Aprox 2.76K tax

    Your partner will pay less as they are still at 20% tax rate


    Best talk to an accountant, it would make tax scene for the lower earner to get more of the share of rental income


  • #5
    emma_10
    Registered Users Posts: 5 ✭emma_10


    My accountant, when he was doing tax returns for 2018 said that all income over 69100, even the one that was already taxed will now have to be taxed again @ 52%. I wasn't very happy with the accountant but I didnt know any better so went with what he said.

    We ended up paying nearly 9000 in tax with similar income as above but with slightly more expenses. 9000 also included the late fees ( he didnt get around to registering on time.. so annoying and now not returning my phone calls or emails - so that's why wanted to first of all have a rough estimate of what to expect this year and also need to look for another accountant).


  • #6
    emma_10
    Registered Users Posts: 5 ✭emma_10


    Thanks.


    We did have an accountant last year. This is not the way our accountant explained it to us.


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  • #7
    Thoie
    Registered Users, Registered Users 2 Posts: 6,344 ✭✭✭Thoie


    emma_10 wrote: »
    My accountant, when he was doing tax returns for 2018 said that all income over 69100, even the one that was already taxed will now have to be taxed again @ 52%. I wasn't very happy with the accountant but I didnt know any better so went with what he said.

    We ended up paying nearly 9000 in tax with similar income as above but with slightly more expenses. 9000 also included the late fees ( he didnt get around to registering on time.. so annoying and now not returning my phone calls or emails - so that's why wanted to first of all have a rough estimate of what to expect this year and also need to look for another accountant).

    Accountant, or shyster? If he's a registered accountant, I'd complain him to his professional body if what you've put above is accurate. When you get your new accountant, I'd also be asking for a review of your 2018 taxes - you might get the overpayment back from the tax office (though not the late fees).


  • #8
    emma_10
    Registered Users Posts: 5 ✭emma_10


    Thoie wrote: »
    That 26,800 includes some of your wages, which you've already paid tax on through PAYE.

    Your income without the rental is already over 70k, so for simplicity just multiply the rental income by 52%, gives you tax etc due on the rental income of €8,112.

    If those rental expenses are allowable, then you would roughly be paying
    €15,600 - €2,800 = €12,800 x 52% ==> €6,656


    We did have an accountant for last years return. This is not the way he explained it to us.


  • #9
    Happy4all
    Closed Accounts Posts: 2,089 ✭✭✭Happy4all


    12800 x 52% would be rough calc


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