This Limerick Post feature is the second of two concerned with what private residential landlords should look at closely on an annual basis: their tax returns. Property page met with tax expert Roy Finucane, director of the award winning Tax Assist Accountants firm on Roches Street, to keep up with changing imperatives and legislation.
ROY Finucane brings our attention to lesser known aspects of taxs and income: “Up until 2018, expenses incurred during pre-letting were not allowed but in an effort to increase housing stock available, now up to €5,000 in pre-letting is allowed. Say for example, any repairs, painting, garden improvement required and if you incurred any expenses in order to get the property up to scratch such as cleaning, painting and decorating.
“Yes, a receipt is absolutely necessary and for any treatment or repair of windows, doors and machines.
“There is something else to signal to landlords and that is the Home Renovation Incentive (HRI)) Scheme. And like everything done in the tax realm, the HRI has a double edge to it. Whilst brought in to help the landlord, and a positive in employing people working in relevant trades and finance, the reality is that it brings tradespeople in out of the black economy. Unless your work team gives you an invoice, you cannot claim for landscaping, carpentry, your builder and so on.”
A prompt before you pick up TaxAssist Accountants (free) printed handouts relative to rental properties. The taxman is about:
“The other issue is that there is an increase in the audits of landlords as rightly or wrongly, a lot of landlords have under-declared or not at all, while over-declaring expenses.
“You need to remember that there are all these registers now that did not exist previously, the Local Property Register, the Rental Tenancies Register, even the Water Charges register that is lapsed for now.
“There is a digital footprint of ownership and accountability and it is only a matter of time before Revenue begins to join the dots.”
Don’t forget your obligation to the Rental Tenancies Board (RTB) which actually has a positive bearing on claiming Mortgage Interest Tax Relief, plus the Board’s fee can be put towards expenses incurred.
Landlords sometime in the game recall the Non Private Principal Residence (NPPR) charge of €200 charge per unit. This was done away with some time back as landlords buckled out of the market during times of rental income collapse – there were measure taken to stem the flow. But for the years in which NPPR was valid, you are liable and don’t dream of being able to sell the property unless the debt to Exchequer is made good.
So any landlord out there hiding in the wisteria, who hitherto had collected rent in cash and chose not to leave an electronic footprint, be aware that your golden illicit era of maximised return is doomed. Roy reminds Limerick Post again that Revenue Commission is increasing its number of and frequency of audits in this sector.
Ignorance being no defence against an offended law, take a good look at that which is over-claim or a wrongful claim put in to diminish your tax liability.
Tax Assist’s list of expenditure for which you cannot claim tax relief reads as follows
* Post letting expenses, i.e. expenses incurred after the property has been let out for the final time.
* Property improvements unless allowed under an incentive scheme
* Expenses on premises rented out an on uneconomic basis, e.g. where a property was being rented for €5,000 per annum but expenses attached to the property were €10,000 per annum.
* Mortgage interest from the time you buy the property up until it is first rented out.
* Local Property Tax (LPT), although this is expected to change.
* Any cost for your own time/ labour when carrying out repairs to the property.