Must I pay tax on rent when I move abroad?
I will be leaving Ireland shortly to work in Dubai for a few years. I have decided to rent out my property. Do I still have to pay tax on the rental income received, even though I will be no longer living in Ireland? - Sharon, Howth, Co Dublin
Sandra Clarke replies: As you will be in receipt of rental income from an Irish property, you will have an obligation to prepare and submit a tax return. Even though you are leaving the country, you may be still considered resident or ordinarily resident here for tax purposes.
The amount of rent on which you are liable to pay tax is the gross rental income for the tax year, less any of the following expenses (if incurred): maintenance and general repairs, insurance, letting agent fees, services charges, advertising, accountant's fees for preparing accounts, ground rent and rates.
You can also write off 75pc of the interest paid on loans taken out to purchase, improve or repair the rented property. In addition, there is a wear and tear allowance, where you can write off 12.5pc of the cost of furniture and fittings a year - over eight years.
Should the rent be paid to you abroad or to an account on your behalf, the tenant must deduct tax at 20pc from the payments and remit that tax to Revenue. The tenant must give a completed Form R185 to you to show that the tax has been accounted for. You can then claim this amount as credit on your tax return.
Where you have an agent in Ireland collecting the rent, the gross rent is paid to him. The agent is then chargeable to tax on the rents as collection agent for you and is required to submit an annual tax return and account for the tax due under self-assessment. The agent can be a family member or some person who takes the responsibility.
Incentives for starting in self-employment
I've been unemployed for about two years and am considering setting up my own business as a self-employed individual. Are there any worthwhile financial incentives I can get from the State which would make it a bit easier for me to make ends meet in my first few years?
Mark, Fethard, Co Tipperary
Sandra Clarke replies: You may qualify for the Start Your Own Business scheme, which provides an exemption from income tax on up to €40,000 per annum to an individual who sets up a qualifying business. This exemption is available for a period of two years.
To qualify for the scheme, you must have been unemployed for 12 months or more prior to setting up. You must also have received any of the following during that time: crediting contributions, jobseeker's allowance/benefit, the one-parent family payment or the partial capacity payment.
Time spent on certain training courses and schemes will be treated as part of a period of unemployment, including FAS training courses, the Back to Education programme and so on.
To qualify, your business must be set up before December 31, 2016, and you must trade as a sole trader. It must also be a new business and not bought, inherited or otherwise acquired.
You can claim this exemption by completing the relevant section of your annual tax return form each year. The relief only applies to income tax; it does not extend to USC and PRSI.
You may also qualify for the Back to Work Enterprise Allowance, where you get to keep a percentage of your social welfare payment for up to two years.
- Sandra Clarke is a partner with BCC Accountants, based in Co Meath
Sunday Indo Business