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Tax Return Deadline is Approaching

Tax Return Deadline

Well, the kids are back at school and the evenings are closing in, which can only mean one thing….the tax deadline is approaching!

The deadline for lodging your 2014 Rental Income Tax Return and paying your 2014 tax liability is 31st October 2015. This means there’s just 8 weeks to get your paperwork sorted. Therefore, in order to allow us to review and prepare your Tax Return, you’ll need to have your completed application form and supporting documents into us by 18th September.

We take the hassle out of sorting through your receipts and preparing your tax return – all you have to do is provide the details on our application form and we sort out the rest.

Contact us today for your obligation free quotation.

Tax Issues for Airbnb Hosts

Tax Issues for Airbnb Hosts

With the increasing popularity of Airbnb in Ireland, many homeowners have been enjoying a little extra tax-free spending money by becoming Airbnb hosts and renting out a room or entire property to tourists or holiday makers.

Assuming the income would fall under the Rent-a-Room Relief scheme, many Airbnb hosts were not declaring this as taxable income. However, Revenue were quick to clarify the situation after seeing the potential loop hole, and unfortunately they did not view the additional income in quite the same light.

So, we thought we’d help shed a bit of light on the issue of taxes for Airbnb hosts in Ireland.

Income from Airbnb rentals is taxable

Income received from renting out a room in your house or the entire property on a short-term basis is taxable. Previously, it was assumed that renting out a room on Airbnb would qualify for the €12,000 tax free threshold under the Rent-a-Room Relief scheme. However amendments to the scheme guidelines now state that short-term lettings are not eligible if they are provided through online accommodation booking sites.

Therefore, you need to declare this additional income to Revenue for taxation purposes. Income from Airbnb rentals is deemed to be trading income and not rental income.

Claim expenses to help reduce your tax bill

It’s not all bad news however! Given that Revenue considers income from your Airbnb rentals as ‘trading income’, it is only reasonable that allowable trading expenses should qualify as deductions. These are expenses like the cost of providing meals, light, heat or laundering costs – as well as repairs and maintenance to guest accommodation areas.

Therefore, it is imperative to keep your receipts for these items so they can be offset against your income to reduce your overall tax bill.

How to declare this income

If you’re a PAYE worker, to declare your additional income to Revenue you need to complete a tax return. This is done via a Form 11 or Form 12, depending on the amount of additional income you have. Where the profit from your additional income is less than €3,174, then you need to complete a Form 12. However, if your profit is €3,174 or more, you need to complete a Self-Assessment return, via a Form 11. Your return needs to be completed by 31st October the following year.

If you are self-employed, you need to declare this as part of your trading income on your annual tax return, via a Form 11.

Thinking of selling? You could get stung for Capital Gains Tax

Unfortunately it doesn’t stop at just taxing your income. Down the line if you decide to sell your property, you could be liable to Capital Gains Tax (CGT) as the property has been used for business purposes.

Normally, the gains from the sale of a principal private residence are exempt from CGT. However, Revenue have said that if all or part of the property has been used for business purposes, including short-term rental accommodation prior to a sale, then a capital gains tax liability would arise on the portion of the property that was used for business purposes. From 2012 onwards, a CGT rate of 33% applies – ouch!

It pays to get your taxes right

Revenue have said that since 2013 it has had access to data from financial institutions related to credit and debit card transactions, which mean it can identify online traders in this area. Therefore, there is no use burying your head in the sand, as it is quite likely that Revenue will be undertaking spot checks in this area and you could be penalised if you have declared this additional income.

For more information, visit Revenue’s website.

Written by Breda Lyster

Breda LysterI’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.

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.

 

 

A Simple Guide to Being a Landlord

A Guide to Being a Landlord

Many landlords are reluctant landlords these days, so it can be a little overwhelming working out what you need to do to get set up as a landlord in the first place. It’s not as easy as just handing over the keys and receiving rent back. So, here’s a simple guide to being a landlord in Ireland.

Letting Agent or Go It Alone?

One of the first decisions to make when renting a property is whether to manage the property yourself or to engage a letting agent or management company. To help you decide, there’s a few questions you should ask yourself:

  • Do you have time to respond to enquiries and show possible tenants through the property?
  • Do you have time to deal with tenant problems?
  • Do you have the time and know how to carry out maintenance on your property?

In the end, the decision will depend on your individual circumstances.

Review the market

You need to decide how much rent you will charge – which will ultimately depend on the location and quality of your property and similar properties available to rent in your area.

Be realistic! You need to factor in times when the property is empty in the financial projections, as well as all the other costs associated with having a rental property.

Get your property rental ready

There’s a few things to get sorted before you start looking for tenants. Firstly, you need to ensure that property meets certain minimum standards – this includes things like the property is free from damp, in good structural repair, has hot and cold water, adequate means of heating and ventilation, appliances are in good working order and electrical wiring, gas, pipes are in good repair. You also need to have a Building Energy Rating, or BER, Certificate.

Spread the word

There’s loads of different ways to get the word out that your property is available to rent – and they’re not expensive! One of the most popular ways is to list your property on www.daft.ie which costs approx. €20. You can also place an advertisement in your local or national newspaper or if you are near a College or University, even posting an advertisement on student noticeboards can attract potential tenants.

Know your rights

It’s important to know your rights when becoming a landlord. The Residential Tenancies Act 2004 outlines your rights as a landlord, which include:

  • Setting the rent, once a year according to the current market
  • Receiving the rent from the tenant on the date it is due
  • End the tenancy without reason within the first six months of the lease agreement. However, special care should be taken when dealing with fixed term tenancies as a reason will always have to be given
  • Be informed of who is living in the property
  • Decide whether to allow sub-letting by the tenant
  • Be informed of any repairs needed and be granted reasonable access to fix them
  • Refer disputes to the Private Residential Tenancies Board (PRTB) once the tenancy is registered

Know your obligations

Likewise, there are certain obligations you need to fulfil in order to execute your role as a landlord in accordance with the law. These include:

  • Register the tenancy agreement with the Private Residential Tenancies Board. This only costs €90 and means you will be able to avail of the PRTB’s dispute resolutions service. Plus, if you don’t, you may be prosecuted.
  • Provide your tenant with a rent book (if no written lease is in place) and receipts of payment
  • Make sure that your property is in good condition
  • Pay any charges related to the property e.g. taxes and duties
  • Maintain the property to the standard it was at the start of the tenancy
  • Reimburse the tenants for any repairs carried out on the structure
  • Insure the property
  • Provide your tenant with information and contact details of any agent who deals on your behalf.
  • Cancel your Tax Relief at Source (TRS), if you have a mortgage and were claiming this
  • Submit a Rental Income Tax Return before the 31st October of the following year

Manage your finances

As you have rental income, you will now be required to complete a tax return. Rental income is liable to income tax but you are allowed to offset certain expenses, such as

  • Mortgage Interest
  • Accountancy Fees
  • Insurance
  • Repairs

Things like opening a separate bank account for your rental income and expenses and keeping accurate records (and your receipts!) for all your rental expenses will help make your life a whole lot easier when it comes to tax time.

Don’t be afraid to ask for help!

Knowing what expenses you can and can’t claim is not an exact science and the last thing you want to do, is submit an incorrect tax return. Our team are experts in managing your rental income tax return and will offer you a personalised service, so you know the job has been done right!

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.

Mortgage Interest Expensed against Rental Income

Budget 2012 Mortgage InterestPossible changes to Mortgage Interest Allowed.

For most people, Mortgage Interest is the largest expense item you can claim against your rental income in Ireland.  While it used to be allowable 100% against your rental income, since 2009 you can only claim 75% of your mortgage interest in reducing your tax bill.  This change resulted in many people having a profit on a their rental properties, where previously they had a loss.

TASC Recommends further Reduction

One of the recommendation from TASC, an independent economic agency, for Budget 2012 was to further reduce the amount of Mortgage interest allowed from 75% to 40%.

Will it Happen?

Certain areas are seen as easy targets in Budgets and landlords / rental income certainly fit the bill in this.  But as it is already proposed in Budget 2012 to introduce PRSI on rental income, putting two charges on landlords in the same Budget may prove to be a touch too far.  We’re hoping this TASC proposal is kicked to touch in this Budget.

If this was introduced in the Budget, the cost to a landlord who pays tax at the higher rate would be approximately €182 per €1,000 of previously allowable mortgage interest.

Budget 2012

Keep up to date with how Budget 2012 with affect Landlords and your Irish rental income tax returns on our blog here or for non rental income changes, check out our Budget Calculator which we will update on the evening of the 6th December.

Costs incurred on investment property

As a landlord, you will intermittently incur costs for some of the following items

  • Plumbing repairs
  • Electrical repairs
  • Management fees
  • Letting fees
  • PRTB registration

It is a Revenue requirement that these records/documents are kept for a period of 6 years.

RentalIncome.ie is here!!!

We are here to assist you with your annual tax compliance as a landlord.

We will ensure that not alone will you comply with Revenue, but also ensure that we provide you with tax advice on minimising your tax bill.

Contact our offices @ 05991 29800 for further information.