Tax Tips Prior To Year End

Home Renovation Incentive – [HRI] 

Who says tax deductibles can’t be fun? Have you heard about the home renovation incentive? Have you been dying to get the kitchen redone? What about retiling the bathroom? OR simply just a fresh coat of paint in the house? The HRI has you covered! It even covers buy to let properties, just make sure you have a tenant within 6 months of completing the works.

Where’s the trick you ask? So long as you ensure the contractor you get to do the works is a HRI qualifying contractor then you’re in the clear! That simply means making sure they are registered for VAT and are completely tax compliant. They’ll know how to file all the relevant paperwork . All you need to check is that they submit the payments in the HRI system online. It’s as simple as that!

You can then claim for the HRI tax credit the following tax year.

Here’s the mathsy bit:

This is an incentive that makes it possible to claim the VAT element of renovation work up to €30,000 excluding VAT . The maximum amount claimable is the VAT inclusive price of €34,050 so that vat element of €4,050 can be claimed back over a 2 year period following the year in which the works were carried out and paid for.

Rented residential Properties – Residential Tenancies Board [RTB]

Are you lucky enough to be a landlord? Then this section will be of interest to you! Nobody likes paying a mortgage, but what if we told you, that you could get a tax deduction for the interest on your mortgage? Thought that might get your attention! Simply register the tenent with the Residential Tenancies Board and you’re sorted!

For the mathsy bit:

Person B has a buy to let property. They have a mortgage on this of €200,000 with €8000 per year in interest. However they have been renting this property since January 2017 for €1000 per month, so that would generate €12,000 a year. They can deduct 80% of the interest cost, which is €6400, from the income, so they would be left with a taxable profit of €5600 and assuming a tax rate of 51%, their tax liability would be € 2856. If you haven’t registered with the PRTB your tax liability will be €6120 which is over double. That’s a huge difference and a HUGE SAVING!

How does it work though if you’re renting through the government? Then you’ve heard of The Housing Assistance Payment (HAP). This is a form of social housing support for people who have a long-term housing need. Where properties are let to the local authority for social housing for a 3 year period from 1 January 2016 the restricted amount of mortgage interest, 25% for 2016, 20% for 2017 and 15% for 2017 will be deemed to have accrued on the day after the final day of the 3 year period and should be deductible in year 4.

For more information check out the Revenue website or contact Comerford Foley Accountants and Tax Advisors on 051 396 703