The Sunday Independent reported last weekend that the Revenue is monitoring PAYE workers with rental income. If you have rental income, you are obliged to file a self-assessment tax return each year, and pay any tax outstanding.
The paper quoted a Revenue spokeswoman as saying “All information available to and information received by Revenue in relation to rental income is acted upon on an on-going basis. Projects, specifically aimed at investigating landlords in the private rented sector, are regularly undertaken in all regions to monitor this sector. Arising out of these projects, some cases are referred for further investigation and audit.”
Ironically, this news comes at a time when many amateur landlords with 1 or 2 investment properties are making losses rather than profits on their properties. Rents have fallen and vacancy rates have risen significantly in recent years, and some owners are struggling to meet their mortgage commitments each month.
Even if they are incurring losses, and have no current tax liability, the onus remains on each individual landlord to file an annual tax return with Revenue.
Any property owner who has failed to file returns for past years should bring their affairs up to date as soon as possible. This is especially important if there is a possibility of tax arrears arising. If Revenue impose interest and penalty charges on top of tax arrears, the total bill could amount to a tidy sum. Interest continues to accumulate each month until the liability is paid
Unfortunately it is not possible to offset subsequent rental losses against previous rental profits.
You can find a guide to preparing your Rental Income Tax Return, on my website.
Here is the Sunday Independent article.