PKF-FPM Tax Corner
QUESTION: I live in Northern Ireland and have recently bought a house in the Republic which I intend to rent out. I already submit a UK tax return, so should I declare the rental income from my investment property on my UK tax return or do I also have tax returns to file in the south of Ireland?
ANSWER: Following the acquisition of your investment property in the south of Ireland you will be recognised as a non-resident landlord. You will therefore have an obligation to declare your rental income to the Revenue Commissioners in Ireland as well as to the UK tax authorities.
You can do this by one of two ways. You can register for Irish income tax and advise your tenants to withhold 20 per cent income tax on the gross rents they pay to you and remit this to the Revenue Commissioners on your behalf. If you receive your rent after your tenants have withheld 20 per cent income tax from the rental payments you will then be entitled to a credit for this tax when you file your Irish tax return.
Alternatively, you could appoint a collection agent in Ireland who will become registered for taxes in Ireland on your behalf and will file an annual tax return in respect of your Irish rental income. If a collection agent is appointed the rents can be received gross, without deduction of income tax.
This is often the simplest and most convenient method of receiving rental income as a non resident landlord and ensuring that the correct tax is paid to the Revenue Commissioners.
As you are UK resident you are also required to declare your worldwide income on your UK tax return, which would include your Irish rental income. To avoid paying tax on your rental income in both tax jurisdictions HMRC allow you to claim Double Taxation Relief in respect of your rental income on your UK tax return.
This ensures that you don't pay tax on the same income twice. You should also be aware that you must pay Local Property Tax (LPT) on your house in the south.
LPT is based on the market value of your house and for 2014 you must pay your local property tax no later than November 1 2014.
You are also legally required as a landlord to register your tenancy with the Private Residential Tenancies Board (PRTB) in Ireland.
* Feargal McCormack (f.mccormack@pkffpm.com) is managing director at PKF-FPM Accountants (www.pkffpm.com). The advice in this column is specific to the facts surrounding the question posed. Neither The Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.