Question: I have just moved into a new rental property in Dublin City and have already had a problem with my landlord who lives abroad in the United Arab Emirates.
He wants me to pay the rent directly to him by bank transfer, but after speaking to a colleague I understand that in this case I have special obligations to make payments to the tax office, which seems harsh and earns me something, that I shouldn’t have to do.
It’s confusing because I obviously don’t care where or how the rent is paid, all things being equal, but I do claim an expense from my employer to my rent for a year (about half of it) by contractual arrangement I don’t want this to conflict with them or my own tax liability.
What is the situation and should I be concerned?
Answers: Well done picking that up. Most tenants would not be aware of their personal responsibility in this regard, which admittedly can seem more than a little bothersome.
According to Revenue’s website, the rule is that if you pay rent directly to a landlord living abroad, you deduct tax from the rent at the standard rate (currently 20 percent) and report it on a Form 11 or 12 (depending on your employment status) and prepare a completed R185 form (Certificate of Income Tax Deduction) for your landlord at the end of the year.
This has nothing to do with your personal tax account or the relief due (if you’re eligible), but rather a withholding tax on your landlord’s income.
Until 2017 you could claim a tax credit if you paid for privately rented accommodation, but this is no longer available (although keep an eye on the upcoming budget later this month, where some rent reduction measures could be reintroduced).
There is an exception to the rule if you are paying rent through a collection agency and if this is the case they are required to file the non-resident landlord’s annual tax return and file it with the Inland Revenue.
It appears from your question that you pay the rent directly, but it may be that you could offer this as a solution and it would take the problem out of your hands.
I assume, of course, that your absent landlord is fully tax compliant and wants to be. The collection agent doesn’t have to be a real estate agent or accountant, which could cost the landlord money — it can be a friend or family member who can take responsibility.
It’s a hassle for you to do this as you (rather than the landlord) are liable for any taxes that should have been deducted if you fail to comply. Revenue provides examples of how it works on their site (Revenue.ie), which is excellent, but it’s not too complicated. Still, if it were me, I’d push back on having to do the work.
Also, and separately, remember that any contribution to rent from your employer will most likely count as a benefit in kind for tax purposes and should therefore be declared.
Question: I have bought a retirement bungalow in Monaghan and will be doing some work on it before moving in. I want to add a bedroom extension and replace the kitchen and need unoccupied home insurance for about six months. Please let me know where I can get this.
Answers: It’s a tough question, and you’re right to look for it. Many people mistakenly assume that a vacant house is covered by regular home insurance. In some cases they believe it must be even cheaper since there is nothing to steal.
But as Deirdre McCarthy of Insuremyhouse.ie explains: “There are generally higher risks associated with an unoccupied house, especially over a longer period of time – in your case six months, possibly longer if construction and renovation take longer than expected, which inevitably it does.
“Therefore, of course, insurers are reluctant to continue the insurance cover at the same price and under the same conditions.
“Not as many insurers will bid for an unoccupied home and those that do will charge more and may limit coverage (i.e. don’t cover theft or flood, only cover major fire risk) and perhaps insist that someone check the home weekly checked etc.
“The best thing to do is to contact your local broker on this matter. There are a number of insurers who will assess this risk for you, but most of them only insure policies through brokers.
“The good news is you should have a couple of insurers willing to make offers, so hopefully the cost should be reasonable.”
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https://www.independent.ie/life/home-garden/my-landlord-who-lives-abroad-wants-me-to-pay-rent-directly-to-him-what-are-the-tax-implications-for-me-41972619.html My expatriate landlord wants me to pay rent directly to them – what are the tax implications for me?