Landlords: Tips for getting your tax returns in order

If you rent out a property you are probably already aware that you need to file an income tax return. For some landlords, the process can be difficult and time-consuming. This is a look at some of the most common queries.

What can and what can’t I claim for?

Some examples of allowable expenses include:

· insurance premiums

· cost of any utilities that are not repaid by your tenant e.g. electricity

· mortgage protection premiums

· repairs and maintenance e.g. cleaning, painting, plumbing etc

· the cost of registering with the Residential Tenancies Board (RTB)

You cannot deduct the following expenses when you are calculating your rental profit or loss:

· Local Property Tax (LPT)

· capital expenses on property improvements so any extensions or major refurb etc (unless allowed under an incentive scheme)

· any cost for your own labour when carrying out repairs to the property

But the rent only barely covers my mortgage, do I still have to pay tax?

Lots of landlords find themselves in this situation but unfortunately a tax bill often still arises.

Remember, you cannot just minus the mortgage payments from the rent to arrive at a profit figure. You are only allowed claim a tax deduction for the mortgage interest. Any capital repayments are not allowed against income tax.

What if I am way behind?

If you have tax returns outstanding, then the sooner you address it the more understanding Revenue are likely to be. In certain cases they will allow the outstanding taxes to be paid over a number of years as part of a payment plan. It is important to get good advice on how to engage with Revenue to get the best outcome.

If you have not paid LPT on your investment property, you should do so straight away as Revenue can withhold tax refunds or alternatively enforce surcharges on income tax returns. It should be noted that Revenue are pooling all this information and cross-referencing people who have paid the LPT against the rental income details of their tax return.

For a free consultation with TaxAssist Accountants, contact Clive Aherne in Washington Street on 021-2427447 or Terry O’Donovan on 021-2427576 in Blackpool.