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.
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.
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.
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.