QI've been renting out a second property for four years – but have never registered as a landlord with the Private Residential Tenancies Board (PRTB), or with the Revenue Commissioners. My tenant contacted me recently as he wishes to claim tax relief on the rent he has paid. How much tax relief is my tenant entitled to, is there any way I can avoid registering as a landlord given that my tenant wishes to claim the tax relief, and if I register now could I face penalties for registering late?
Geraldine, Rathmines, D6
A Your tenant needs to have been renting since December 7, 2010 to claim the rental tax credit. This relief is being phased out, but the current tax credit for 2014 is €160 for a single person or €320 for a married couple.
Of more serious concern is that you have not registered as a landlord with the PRTB or for tax purposes. There is a fixed registration charge with the PRTB and late fees do apply. Furthermore, if you have a mortgage outstanding on your rental property, you can't claim tax relief on your mortgage interest unless you have registered with the PRTB.
Now to tax. When you have a source of income that is not PAYE income, you have an obligation to register with Revenue, file a tax return declaring your total income, and pay your tax, PRSI and universal social charge. There are some instances where, if the rental income is small, the tax liability is collected by coding it on to your tax credit certificate – but this has not happened in your case.
You could face penalties, surcharges and interest for not paying tax on your rental income, depending on the amount of tax you owe, and the length of time the tax return or tax payment is outstanding.
Revenue will also take into account whether you have been reactive or proactive about your tax obligations when it decides what kind of penalties you could face. If you previously have had a clean record with Revenue and this is an honest error on your part, making a voluntary disclosure to them now will allow Revenue to take a more lenient approach.
I would suggest you engage a tax adviser to guide you through this process. They can assess your liability to tax for the relevant years, and then work with Revenue to obtain the best settlement arrangement on your behalf.
Q I started my first job last year and I paid a lot of emergency tax because I had trouble providing the right forms. I thought I was entitled to a full tax refund but my employer has not yet given it to me. Am I entitled to a refund of my emergency tax and how do I claim it?
John, Naas, Co Kildare
A As we are now in a new tax year, your employer cannot refund your 2013 tax to you directly through payroll, as he will have paid it over to the Revenue. You can, however, claim a refund of any overpaid tax directly from the Revenue. The level of refund will depend on the level of income you earned, but normally income up to €16,500 is covered by your annual tax credits and should trigger a full refund.
To apply for the refund, you will need to send your P60 to your local tax district. Your P60 is your year-end statement of earnings given to you by your employer. The Revenue may request that you complete a Form 12 or 12s, which you should do, if requested.
Oonagh Casey is a tax partner with the Dublin firm Fagan & Partners