Bit of a roundabout way of saying it if so
Can’t believe how excited people get about a qualification. Surely there is more to your 20s than slaving over exams? Each to their own I suppose
May be the wrong thread, but can anyone recommend a good site or source of information for commodoties as a means of investment?
What exactly are you trying to do Mullach. Give us a bit of detail there and I might be able to point you in the right direction.
Could someone please tell me, which side accrued wages goes on, on the Wages Control A/c?And does it have to be reversed in the following accounting period or does it already form part of the opening balance brought forward?
I’m sure this is meat and drink for some of the established accountants on this site but its wrecking my head?
I’m very interested in the answer to this. [quote=“Whiplash, post: 612365”]
Could someone please tell me, which side accrued wages goes on, on the Wages Control A/c?And does it have to be reversed in the following accounting period or does it already form part of the opening balance brought forward?
I’m sure this is meat and drink for some of the established accountants on this site but its wrecking my head?
[/quote]
Wages accrued is wages due and as such is a liability. It would be a Bal b/d on the credt side of the wages account (it was the Bal c/d on the debit side from the previous period). It would have been accounted for in the last trading period i.e the trading period it accrued due to the matching principle.
Not an accountant so wait for the accountant lads to verify.
What percentage tax must be paid on rental income?
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Tax on rental income - the most common questions [color="#808000"]Go back to tax centre
Is rental income liable to tax?
Residential property investment is a business, and like any business is liable to taxes.
How is rental income taxed?
Rental Income is taxable under the Irish tax system. For most cases of rental income, the amount taxable can be calculated as follows:
Gross Rental Income less Allowable Expense less Capital Allowances = Taxable Rental Income.
What taxes are landlords liable for?
Landlords are liable for the following taxes:
· Income tax on rental income
· Stamp duty on property purchase
· Capital gains tax on disposal
Income Tax
Rental income on investment property is subject to income tax. It is therefore vitally important to maintain proper records of rents received and details of expenses incurred. All receipts should be kept for inspection by the revenue if required.
Stamp Duty
Stamp duty is a tax payable on the purchase of property. Changes in the 2007 budget have reduced the amount of stamp duty payable. The current stamp duty rates are:
Property Value Rate
Up to €125,000 Exempt
Next €875,000 7%
Balance 9%
[color="#808000"]Click here for stamp duty calculator
Capital Gains Tax
The sale of an investment property is subject to capital gains tax. The current rate of capital gains tax is 20%. Certain costs are allowable when calculating the liability for capital gains tax:
· Capital spent on enhancements to the property
· Costs incurred in the purchase and sale of the property such as legal fees and estate agents fees.
Can I offset any expenses?
Yes, certain expenses are allowable against rental income when calculating your tax liability.
Allowable Expenses
Certain expenses incurred may be used to reduce the income tax liability on rental income, these include;
· Qualifying mortgage interest
· Management fees
· Advertising expenses
· Estate agent fees
· Insurance premiums
· Legal fees for drawing up leases
· PRTB registration fee
· Mortgage protection policy premium
· Accountants fees for preparing rental accounts
· Refuse and other service charges – if paid by the landlord
· Cost of repairs and maintenance – this covers repairs and general maintenance of a property, however it is not possible to claim for your own time, for example, cutting the grass
· Wear and Tear (see capital allowances)
Note: Pre-letting expenses are not an allowable deduction. If you do repairs to the property yourself, it is not possible to claim your own labour as a cost.
Important: Properties must be registered with the Private Residential Tenancies Board in order to claim mortgage interest as an expense!
Capital Allowances
Relief against income tax is allowed on items that are purchased to furnish the property. The current allowance is 12.5% of the cost over 8 years (effective since Dec 2002) For example, if you purchase a suite of furniture for €1,000 a capital allowance of €125 per year can be off-set against the rental income for tax purposes for the next 8 years.
With effect from 4 Dec 2002 the allowance is 12.5 % per year over 8 years
· For the period between 1 Dec 2001 and 3 Dec 2002 the allowance was 20% per year over 5 years
· Prior to 1 Jan 2001 the allowance was 15% per year for the first 6 years and 10% in the 7th year
A profit on one rental property can be offset against a loss on another property owned by the same landlord.
Losses on rental income
A loss on rental income can be carried forward to the next tax year but it cannot be offset against tax on other income e.g. PAYE
A loss on rental income can only be carried forward against future rental profits. The loss must be claimed in the relevant tax year and carried forward. If the loss is not claimed in the relevant tax year it cannot be used in a future tax year.
Tax on rental income - how is it paid?
Profit on rent is taxed on an actual tax year basis. Individuals taxed under the PAYE system who have rental profits must make a tax return under the Self Assessment system. Your accountant can complete this tax return for you.
When must the tax return be made?
The return must be made by October 31st of the following year. For example a tax return for rent received in 2007 must be made by 31st October 2008.
What records must be kept for tax purposes?
You must keep full and accurate records of your lettings from the start. You need to do this whether you send in a simple summary of your profit/ loss, prepare the accounts yourself or have an accountant do it for you. All supporting records such as invoices, bank statements, cheque stubs, receipts etc should be retained. You must keep your records for six years unless your revenue office advises you otherwise.
Source: revenue
How are non resident landlords taxed?
On receipt of the annual tax return, profit from rent i.e. rent received less allowable expenses will be assessed. The landlord is entitled to claim relief for expense, which are usually allowed in arriving at the rental profit. The landlord is also entitled to a credit for the tax deducted by the tenant. Form R185 should be submitted by the landlord with the tax return to obtain credit for the tax retained.
TIP An investor buying a new build investment property will pay stamp duty on the purchaser price net of VAT not the VAT inclusive price. Many investors pay the stamp duty on the total price, wasting hundreds and possibly thousands of euro.
Spot the business teacher!
+1
The legislation on stamp duty has been updated since then.
I’d be interested in finding out the answer to whiplash’s question.
As an aside to this, can someone explain to me how journal adjustments work? Like all of them, in layman’s terms. Cheers.
Thanks for that fp but still don’t know what rate tax is paid at?! I’ve been told ‘case 5’ income is always 25 per cent but someone else told me it depends on what tax rate your own income is and if you pay tax on your wages at 42 per cent you must pay the same for rental income?
You have to fill out a P11 form Gola. On this you must supply info on your PAYE income. Thus, I’m pretty sure you will end up paying tax at the higher rate of 41 percent on the rental profit.
It is probably worth going to an accountant and paying them a few quid to make the return on your behalf. In the current climate you really need to be tax compliance.
Do you teach accountancy?
No
A lovely message from our governing body today in case anyone missed the email:
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[center][size=5]Chartered Accountants Ireland[/size][/center][center][size=5]would like to wish you all a[/size][/center][center][size=5]very happy Christmas and peaceful New Year[/size][/center][center][size=5]http://charteredaccountants.newsweaver.ie/images/6351/24941/2200835/logo_rgb_72dpi.jpg[/size][/center]
![http://charteredaccountants.newsweaver.ie/images/6351/24941/2200835/logo_rgb_72dpi.jpg[/size][/center]](http://charteredaccountants.newsweaver.ie/images/6351/24941/2200835/logo_rgb_72dpi.jpg%5B/size%5D%5B/center%5D){kind=link}
Rocko, have they sent the sub letters out yet?
Did that end up being a BIK after?