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Withholding Tax for Non-Resident Landlords

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  • 30-04-2020 11:36am
    #1
    Donald Trump
    Registered Users Posts: 19,175 ✭✭✭✭


    Browney7 wrote: »
    OP, can you confirm a few facts.

    Does his partner work or is it just him? If it had been just his income which has now stopped it's clear there has been a severe drop in their income but not that this "should" be your problem.

    As you are in Australia, I assume you are tax resident there - has the tenant been paying you the rent directly or to an agent? There is the possibility that they should be deducting 20% from the rent themselves to pay to revenue. This is the tenants responsibility.




    That can't be right can it? Unless I misunderstood what you are saying.


    So if I am a tenant and my landlord fucks off to Australia for a year or two and doesn't tell me, and Revenue come calling, it was my responsibility to have been holding back 20% of the rent and sending it to them???


    That can't be right. So I must be misinterpreting what you said.


    (Nobody knows, but I'd say there is a decent chance that someone who fecked off to Oz for a year long working holiday would probably just chance using up their Irish tax credits against the rental income as if they stayed here and were just not working...........which if you had a crafty tenant who suspected that....might be delighted to use that fact to his advantage......although you wouldn't be past the deadline to pay that tax)


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    #2
    Browney7
    Registered Users Posts: 3,100 ✭✭✭Browney7


    Donald Trump wrote: »
    That can't be right can it? Unless I misunderstood what you are saying.


    So if I am a tenant and my landlord fucks off to Australia for a year or two and doesn't tell me, and Revenue come calling, it was my responsibility to have been holding back 20% of the rent and sending it to them???


    That can't be right. So I must be misinterpreting what you said.


    (Nobody knows, but I'd say there is a decent chance that someone who fecked off to Oz for a year long working holiday would probably just chance using up their Irish tax credits against the rental income as if they stayed here and were just not working...........which if you had a crafty tenant who suspected that....might be delighted to use that fact to his advantage......although you wouldn't be past the deadline to pay that tax)
    From Revenue:

    If you pay rent directly to a landlord who is resident outside Ireland, you must:

    deduct and send 20% of the total rent due as tax to Revenue
    pay the remaining 80% to your landlord
    send a completed Form R185 to your landlord at the end of the year. This form shows how much tax was paid to Revenue.
    Your landlord can then claim this amount as a tax credit on their tax return.

    Now the OP needs to consider their residency and domicile etc to determine tax liability but the offshore nature of the OP adds considerations to leverage and negotiations etc


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    #3
    Donald Trump
    Registered Users Posts: 19,175 ✭✭✭✭Donald Trump


    Browney7 wrote: »
    From Revenue:

    If you pay rent directly to a landlord who is resident outside Ireland, you must:

    deduct and send 20% of the total rent due as tax to Revenue
    pay the remaining 80% to your landlord
    send a completed Form R185 to your landlord at the end of the year. This form shows how much tax was paid to Revenue.
    Your landlord can then claim this amount as a tax credit on their tax return.

    Now the OP needs to consider their residency and domicile etc to determine tax liability but the offshore nature of the OP adds considerations to leverage and negotiations etc




    Fair enough.....but if I'm a tenant renting a house in Dublin off a retired Galwayman and I'm just transferring rent to his bank account every month, it seems a bit unfair that I'd potentially be liable for the fact that he actually spends a total of about 6.5 months of the year in his apartment in Spain.


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    #4
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    Browney7 wrote: »
    From Revenue:

    If you pay rent directly to a landlord who is resident outside Ireland, you must:

    deduct and send 20% of the total rent due as tax to Revenue
    pay the remaining 80% to your landlord
    send a completed Form R185 to your landlord at the end of the year. This form shows how much tax was paid to Revenue.
    Your landlord can then claim this amount as a tax credit on their tax return.

    Now the OP needs to consider their residency and domicile etc to determine tax liability but the offshore nature of the OP adds considerations to leverage and negotiations etc


    Just going to throw this out there.
    Tenants is supposed to be paying that tax to revenue and not the landlord.
    Tenant keeps the money.
    Who will revenue come chasing for it? The tenant who was supposed to be paying it? Yeah right.


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    #5
    Ray Palmer
    Registered Users Posts: 8,365 ✭✭✭Ray Palmer


    Donald Trump wrote: »
    That can't be right can it? Unless I misunderstood what you are saying.

    No he is correct. Many people don't realise this but numerous articles in the newspapers about it. Remember ignorance of the law means nothing.


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    #6
    ebayissues
    Registered Users Posts: 447 ✭✭ebayissues


    Browney7 wrote: »
    From Revenue:

    If you pay rent directly to a landlord who is resident outside Ireland, you must:

    deduct and send 20% of the total rent due as tax to Revenue
    pay the remaining 80% to your landlord
    send a completed Form R185 to your landlord at the end of the year. This form shows how much tax was paid to Revenue.
    Your landlord can then claim this amount as a tax credit on their tax return.






    Hang on really??? WTF


    What if the house is rented through an agency?


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    #7
    Claw Hammer
    Registered Users Posts: 6,168 ✭✭✭Claw Hammer


    ebayissues wrote: »
    Hang on really??? WTF


    What if the house is rented through an agency?

    The agent has to pay 20% of the rent to the revenue, not the tenant.


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    #8
    Valhallapt
    Registered Users Posts: 1,226 ✭✭✭Valhallapt


    The_Conductor wrote: »
    The rule is once you have been non-resident for >183 in the *previous* tax year, you are not considered to be tax resident in the current tax year. Aka the OP remains tax resident for year one, but if they do not return to Ireland in year 2 and spend at least 183 of year 2 here, they are not considered to be tax resident for year 2, on the basis they exceeded 183 days of non-residence in the previous year......

    I didn’t say he was considered resident, I said ordinarily resident, this is a subtle tax interpretation with an important difference, they are Tax resident, tbh it’s a grey area area which revenue use to their benefit. OP clearly has Ireland as their Centre of Economic Interest and intends to come home. OP most likely making a tax return in Ireland this year.

    Point I’m making is it is not a tenants responsibility to track the where abouts of their landlord. I would expect the rental agreement to reflect the fact that the landlord was not tax resident at time of signing, and to be changed otherwise. RTB standard agreements for this??


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    #9
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    Donald Trump wrote: »
    Fair enough.....but if I'm a tenant renting a house in Dublin off a retired Galwayman and I'm just transferring rent to his bank account every month, it seems a bit unfair that I'd potentially be liable for the fact that he actually spends a total of about 6.5 months of the year in his apartment in Spain.

    You are certainly not liable to pay any more if you were not informed by your landlord of their domicile or where they are ordinarily resident. When you are making your payment you would be paying it either in cash or more likely into a bank account somewhere. If you are paying into an Irish bank account you have nothing to worry about, all this money is taxable within the state.

    If however you are paying into a foreign bank account you would not be able to turn around and say you didn't know.


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    #10
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    Browney7 wrote: »
    From Revenue:

    If you pay rent directly to a landlord who is resident outside Ireland, you must:

    deduct and send 20% of the total rent due as tax to Revenue
    pay the remaining 80% to your landlord
    send a completed Form R185 to your landlord at the end of the year. This form shows how much tax was paid to Revenue.
    Your landlord can then claim this amount as a tax credit on their tax return.

    Now the OP needs to consider their residency and domicile etc to determine tax liability but the offshore nature of the OP adds considerations to leverage and negotiations etc

    This will only become relevant if the rev can prove you are paying into a foreign bank account. If your landlord is receiving rental income into an Irish bank account but is non ordinarily resident this has no relevance. Non domiciled landlords would need to set up a company in Ireland to facilitate any rental agreements.

    Obviously there is the potential of foreign cowboys operating, but if they have an Irish bank account it is not an issue as they must declare any rental income deposited there. Otherwise the tenant needs to be deducting the 20%. The rev will come down heavy on this because they must ensure that non resident landlords are not ripping the piss, this is easily done with a complicit tenant.

    So if your brother is your landlord and he lives in Spain and you are paying him directly into his Irish account pay 100%. If you are paying into his account in Seville pay 80% and fill in the form. ( and pay the rev the 20% )


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    #11
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Mod

    Split into separate thread.


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    #12
    Claw Hammer
    Registered Users Posts: 6,168 ✭✭✭Claw Hammer


    IAMAMORON wrote: »
    This will only become relevant if the rev can prove you are paying into a foreign bank account. If your landlord is receiving rental income into an Irish bank account but is non ordinarily resident this has no relevance. Non domiciled landlords would need to set up a company in Ireland to facilitate any rental agreements.



    What is the basis for these propositions?


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    #13
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    Claw Hammer wrote: »
    What is the basis for these propositions?

    I was mainly hoping it would annoy you if I am being honest.

    This discussion is now over.


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    #14
    James Bond Junior
    Registered Users Posts: 5,130 ✭✭✭James Bond Junior


    I am a overseas landlord and I deduct 20% off my gross rent. My accountant will do a return for me in October. My research tells me this is allowable and my letting agent said as much.


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    #15
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    James Bond Junior wrote: »
    I am a overseas landlord and I deduct 20% off my gross rent. My accountant will do a return for me in October. My research tells me this is allowable and my letting agent said as much.

    Where are you domiciled?


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    #16
    James Bond Junior
    Registered Users Posts: 5,130 ✭✭✭James Bond Junior


    IAMAMORON wrote: »
    Where are you domiciled?

    Middle East. Rent paid into an Irish account via agent.


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    #17
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    James Bond Junior wrote: »
    Middle East. Rent paid into an Irish account via agent.

    Is your property in Ireland?


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    #18
    James Bond Junior
    Registered Users Posts: 5,130 ✭✭✭James Bond Junior


    IAMAMORON wrote: »
    Is your property in Ireland?

    Yes. Why would revenue want tax on rent on a house outside Ireland from someone non domiciled?


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    #19
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    James Bond Junior wrote: »
    Yes. Why would revenue want tax on rent on a house outside Ireland from someone non domiciled?

    I get you're are working in the middle east. Where are you domiciled however?

    How long have you been working in ME and do you live there permanently?

    How is your Irish rental portfolio structured? Do you have multiple properties? Does an agent manage your letting?


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    #20
    crossmolinalad
    Registered Users Posts: 837 ✭✭✭crossmolinalad


    If You know nothing about your landlord then you have a problem
    Rented a house from someone for 3 years
    Guy had in contract he would visit property 3 times a year for inspection around Christmas , somewhere in June and in September
    For problems with the property I had his mobile number so I could call him and he would sent out someone for repair
    He never told me he was going out of the country , working and living in Spain
    How do I know if someone in in or out of the country
    Its not my business knowing the whereabouts of my landlord I think
    Luckely never got problems with tax office about it but another tenant who got into big problems for not paying tax and even didn't know his landlord was out of the country


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    #21
    James Bond Junior
    Registered Users Posts: 5,130 ✭✭✭James Bond Junior


    IAMAMORON wrote: »
    I get you're are working in the middle east. Where are you domiciled however?

    How long have you been working in ME and do you live there permanently?

    How is your Irish rental portfolio structured? Do you have multiple properties? Does an agent manage your letting?

    I am domiciled in the ME. I contacted revenue a week after I left and informed them I was no longer resident in Ireland.

    I have one property let and it is agency managed.


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    #22
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    The rev will chance their arm with tenants if they can prove that the tenant knowingly paid a non ordinarily resident full 100% to a foreign bank account. This is to ensure that families ( or friendships) don't rip the piss.

    Otherwise a tenant will always be able to claim ignorance. I cannot think of a circumstance where a tenant is liable if paying into an Irish bank account. There is an onus of responsibility there. But the legislation implemented is targeting owners not tenants. It is in place to ensure that owners are compliant with their Irish rental income return.

    If anyone can share a differing circumstance please do.


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    #23
    Claw Hammer
    Registered Users Posts: 6,168 ✭✭✭Claw Hammer


    IAMAMORON wrote: »
    I was mainly hoping it would annoy you if I am being honest.

    This discussion is now over.

    Annoy me? It is common in this forum for people to make things up and offer them as fact. Sometimes people do actually know what they are talking about and it is useful to look at their sources.
    Anyone who gets annoyed about incorrect information being posted here should stop reading posts in this forum.
    In any case I have ascertained that you are in the category of making things up so it wold be unwise to take you seriously in future.


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    #24
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    James Bond Junior wrote: »
    I am domiciled in the ME. I contacted revenue a week after I left and informed them I was no longer resident in Ireland.

    I have one property let and it is agency managed.

    Ok, so it obviously applies to you as you are not an Irish domicile. Any rental income you receive from your Irish property must have 20% withheld in Ireland and paid to the revenue commissioners.


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    #25
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    Claw Hammer wrote: »
    Annoy me? It is common in this forum for people to make things up and offer them as fact. Sometimes people do actually know what they are talking about and it is useful to look at their sources.
    Anyone who gets annoyed about incorrect information being posted here should stop reading posts in this forum.
    In any case I have ascertained that you are in the category of making things up so it wold be unwise to take you seriously in future.

    Sorry claw hammer, I saw you coming first, ok? I have things to do today apart from get petty and technical with you.

    Please have a nice weekend. If you want any further advice just ask.


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    #26
    James Bond Junior
    Registered Users Posts: 5,130 ✭✭✭James Bond Junior


    IAMAMORON wrote: »
    Ok, so it obviously applies to you as you are not an Irish domicile. Any rental income you receive from your Irish property must have 20% withheld in Ireland and paid to the revenue commissioners.

    Yes. I have an accountant ready to arrange this.


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    #27
    y0ssar1an22
    Registered Users Posts: 16,433 ✭✭✭✭y0ssar1an22


    its a check and balance to ensure a non resident landlord pays their tax. the burden of this is on the tenant (by w/h 20%).

    as far as I know, mgmt companies are allowed w/h the 20% and file a form 11 on behalf of the landlord provided that is the only source of irish income. you do need need to get a unique tax reg # for this though


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    #28
    Claw Hammer
    Registered Users Posts: 6,168 ✭✭✭Claw Hammer


    IAMAMORON wrote: »
    Sorry claw hammer, I saw you coming first, ok? I have things to do today apart from get petty and technical with you.

    Please have a nice weekend. If you want any further advice just ask.

    If i wanted advice, I certainly wouldn't be asking you for it. Advice from people who can't stand over it is worse than useless.


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    #29
    IAMAMORON
    Banned (with Prison Access) Posts: 9,078 ✭✭✭IAMAMORON


    Claw Hammer wrote: »
    If i wanted advice, I certainly wouldn't be asking you for it. Advice from people who can't stand over it is worse than useless.

    QED, I can see why you are busy wrecking heads around here.

    Bye bye.


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    #30
    Claw Hammer
    Registered Users Posts: 6,168 ✭✭✭Claw Hammer


    IAMAMORON wrote: »
    QED, I can see why you are busy wrecking heads around here.

    Bye bye.

    For someone who is supposedly busy you have time to retort but not display your sources? Further demonstrates where the source is.


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    #31
    y0ssar1an22
    Registered Users Posts: 16,433 ✭✭✭✭y0ssar1an22


    OP, have a read of the below:

    https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf

    Where rents are paid directly by a tenant to a person whose usual place of abode is outside the State, the tenant is obliged to deduct income tax at the standard rate from the payment (sections 238(2) and 1041 Taxes Consolidation Act 1997 (TCA)). The standard rate of income tax is currently 20%.


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