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Tax Obligations of the Non-Resident Landlord

Tax Obligations of Non Resident Landlords

So, you’ve flown the coup and headed to greener pastures (or just warmer ones!) in search of work. But, you own a house back home and are renting it out to help cover your mortgage payments while you’re gone. Sound familiar?

A lot of people are in this situation, but are unaware of how this impacts them from a tax perspective. There’s a common belief that once you leave the country, you no longer have any tax obligations back in Ireland. For many people, this is true – however, if you have any source of income continuing from Ireland, be it through interest, dividends, pension or rental income, then you are required to declare that income for tax purposes.

Taxes on your Rental Income

In the case of rental income, landlords who live outside of Ireland – known as non-resident landlords – your tax obligations can be dealt with in one of two ways:

1. Tenants Withholding Tax

The tenant must deduct 20% of the rent due, then remit this amount to Revenue and also complete a Form R185 at the end of the year for the landlord detailing how much tax was withheld. This withholding tax will be held on account for you and can be claimed as a credit upon filing your Income Tax Return.

2. Appoint a Collection Agent

A Collection Agent is someone who assumes the responsibility of submitting your tax returns and paying your tax liability on your rental properties. The Collection Agent will make an annual tax return and account to Revenue on your behalf for any tax due under the self-assessment rules. The agent appointed does not need to be a professional person – rather, they can be a family member or other trusted person who is prepared to do so.

Don’t do any of the above?

Don’t fret! We can help!

Here at Rental Income with Red Oak, we provide Rental Income tax return services for both resident and non-resident landlords. In our experience, a number of clients have highlighted their concerns about both options above with us – be it for cashflow purposes or the fact that they don’t want to burden family members or friends with the responsibility of filing a tax return and paying any tax liability on their behalf.

As one of Ireland’s most prominent tax agents, we recognised this concern and approached the Revenue Planning Department. We suggested to Revenue that if there was no Collection Agent set up and the tenants had not been withholding tax on rents paid, we can proceed to register a non-resident landlord for Income Tax and prepare a return for our client’s rental income. Revenue agreed to this solution and granted us a special dispensation for our clients who fall under this criteria.

Other Taxes

Unfortunately, the taxes don’t stop there – there are a number of other house-related taxes that are the landlord’s responsibility. These include:

  • Local Property Tax (LPT): The LPT came into effect in 2013 and applies to all properties regardless of whether the owner is resident in Ireland or not. For more details on the LPT, visit Revenue’s website.
  • Non-Principal Private Resident levy (NPPR): The NPPR charge is an annual charge of €200 in respect of all residential property not used as the owner’s sole or main residence, or in other words a property tax on second homes in Ireland. The chargeonly applies to properties situated in Ireland and ceased for all rental properties from June 2013. For more details, visit our NPPR FAQ page
  • Household Charge: The household charge was a local authority levy applied to all residential properties in Ireland which only existed for 2012; it was replaced by the LPT from 2013 onwards.  The levy was €100 per dwelling.

Who Pays Water Charges?

The deadline has passed for registering properties with Irish Water for the incoming water charges. As a landlord, you are required to notify Irish Water of your tenant’s details otherwise you may be liable for the charges for any property you own. Irish Water will then engage directly with your tenant’s to establish an account and issue the relevant bills.

Getting Help

For many non-resident landlords, keeping on top of all your tax obligations is a nightmare. Rental Income with Red Oak offer a friendly and expert service to take the hassle out of filing your tax returns and ensure your Income Tax obligations are met.

Contact us today for your obligation free quotation.

Breda LysterWritten by Breda Lyster

I’m the expert when it comes to all things Rent at Red Oak. I’ve been working with our Rental Income clients for the past 3 years, so have seen just about everything – from shoeboxes of receipts to ‘the dog ate my homework’ style excuses. It doesn’t matter what state your rental records are in, I’ll get them sorted for you.

 

 

Residential Investment Property Market 2011

Where is the Market for residential investment properties now?

Many landlords nowadays describe themselves as “Accidental Landlords” or “Reluctant Landlords”, but many others are starting to look at the market asking the question:  Is it a good time to buy?

Buyers Broker are Ireland’s premier buyers agent, and we asked Founder Carol Tallon what is happening in the Market in 2011. Buyers Broker represent 1st time buyers, people moving on, as was well as professional investors.  You only have to see their testimonials to see the incredible passion and customer care they put into their work.

Here’s what Carol has to say about the market in 2011.

Irish Property Market 2011

Since April 2011, the market has spoken and what it tells us is that investors, both Irish and international are back in force, armed with cash and they want to buy residential and commercial investments in Ireland.
Following on from the first and second major impaired assets auctions in April and July, where almost €30 million worth of property sold in, Allsops Space managed to repeat their earlier successes by selling €9.5 million worth of Irish property in just 4 hours last Friday, 23 September.
Banks, Receivers and private sellers who were keen to off-load properties, offered more than 70 lots under the hammer. While maximum reserve prices were exceeded by 35% (as happened in earlier auctions), it appears that 8% to 10% is still the magic figure for investors to hit when it comes to yield calculation and investors should not accept less than 6% this until the market as a whole stabilises.
Despite uncertainty in the market, rents in the capital stabilised in 2010 and rose slightly in the first two quarters of 2011. The stock of available rental properties hit a high of almost 24,000 in 2009 but is now in the region of 16,000.
Of course, a cheap property can be bought cheaply in any market, the key for investors is to buy quality properties below market value.

Cash v Mortgage Lending

Mortgage lending has fallen through the floor this year, with recorded drops of 53 per cent since last year. The total value of new mortgage lending in the first quarter of was €577 million. This should not affect investors through the fire sale auction market as, anecdotally within the industry, cash buyers have been more prevalent in the market as mortgaged buyers for the first half of the year. This trend is likely to continue through 2011 and early 2012. With personal savings in Ireland estimated at almost €100 billion, this is realistic. However, investors looking to get involved with larger projects or multi-unit purchases might find the auction scenario too competitive and might be assured of a better deal outside of such a public forum. Cash investors will find that their key strengths, quick decision-making and ready access to funds, will be rewarded off-market. While NAMA may have an obligation to dispose of property through a public process, non-NAMA banks still have a huge stock of completed properties that are ready to go and in need of buyers.

Market Reached the Floor?

It appears that the investment market has found its floor without much need for government assistance or incentives. The stamp duty initiative was the only positive measure for residential investors. While accurate data reporting remains an issue in assessing value (the new CSO Index merely collects information from the eight main lenders in the market), investors are regaining their position in the market. This drive may be likened to greed but that is not a bad thing for the Irish market. Greed may have played a huge part in the demise of our much-grieved Celtic Tiger, but it appears that this very greed will be the stimulus the market needs to move forward.

Carol Tallon, BA (Hons.), dip. E-Comm., established Buyers Broker Ltd., Ireland’s only property buyers’ agency franchise, in 2006.

Best known for her regular media commentary and radio features as the Irish property buyers’ champion, Carol is the author of the Irish Property Buyers Handbook 2011 (The Liffey Press, May 2011).

She has also published two short business titles through the Oak Tree Press NuBook series, Competitive Intelligence: The Key to Strategic Advantage (April 2011) and Pre-Negotiation: A Strategy for Winning (May 2011).