Property Investment and Taxation

Buy to let involves investing
in property with the expectation of capital
growth with the rental income from tenants
covering the mortgage costs and any
outgoings. However the gross return from buy
to let properties, the rent less expenses, can
change. Investors also need to take a view on
the likelihood of capital appreciation exceeding
inflation. Investors should take a long-term view
and choose properties with care.
 Tip
When choosing between investments always
consider the differing levels of risk and your
requirements for income and capital in both
the short and long term. An investment
strategy based purely on saving tax is not
appropriate.

Which property?
Investing in a buy to let property is not the same
as buying your own home. You may wish to get
an agent to advise you of the local market for
rented property. An agent will also be able to
advise you of the standard of decoration and
furnishings which are expected to get a quick
let.

• a correctly drawn up tenancy agreement will
  ensure the legal position is clear.

Local property tax and stamp duty apply
Income tax will be payable on the rents received
after deducting allowable expenses. Allowable
expenses include mortgage interest, which is
restricted in the case of residential property,
repairs, agent’s letting fees, and the cost of
replacing furnishings.

Need further assistance contact Vanessa

on 0860791476

Relationship Brake up

If you and your partner have recently split up, tax is an area that you may need to consider.

For a couple that is married or has a Civil Partnership, the tax status for the couple (jointly assessed, separately assessed, or singly assessed) before the relationship ends is important.

If you were jointly assessed in the year of separation and you were the assessable spouse, you will be taxed on:

• All of your income for the full year
• Your former spouse or civil partner’s income up to the date of separation
• You can still claim the personal tax credit and PAYE credits for jointly assessed persons and the relevant increased rate band if applicable.

The non-assessable spouse or civil partner will be assessed on their personal income from the date of separation to the following 31 December. They can claim the single person’s tax credit and if they qualify, they may also be entitled to claim the Single Person Child Carer Credit.

For a couple that is separately assessed, we look to see who the assessable spouse under joint assessment would be.  Even in a year of separation, a couple that is assessed under separate assessment should have the same tax payable as a couple under joint assessment so tax bands and credits can be moved to ensure this occurs.

For couples assessed under separate treatment, they are treated as single prior to the relationship ending, and therefore there is no change to their tax position other than if they qualify for the Single Person Child Carer Credit.

Maintenance payments

An area that can get messy is maintenance payments. Not all maintenance payments are recognised and therefore it is important to look at this before payments are agreed.

There are special income tax rules for couples who are living apart, divorced, or have dissolved their civil partnership and certain cohabitants who have ended their relationship.

The maintenance arrangement must be a legally enforceable obligation and made in consideration of the breakup. The paying spouse or civil partner will make the payments gross and will be allowed a deduction against their other income. The recipient will be taxable on this income. This can have some tax benefits if one individual is earning more income than the other as the deduction can reduce the higher rates of USC and income tax and the lower bands and credits of the recipient can be utilised.

An important point that should be remembered is that only payments towards the spouse or civil partner will either be deductible or taxable. Any payments for the benefit of a child will be ignored by both parties.

If both parties sign a joint application and they meet the conditions the maintenance payments are ignored for tax purposes.

Transfer of assets

Capital Gains Tax

When spouses or civil partners are living together they can avail of a capital gains tax exemption on transfers between them.

When the separation of two spouses becomes permanent, the spousal exemption no longer applies to the transfer of assets. However, if the assets are ordered to be transferred by court or under the deed of separation or divorce settlement, these transactions are exempt from capital gains tax. Again, some exceptions apply to this e.g. trading stock or if one partner would not have been taxable on the gain i.e., not resident.

Any transfers between former partners after divorce will be liable to capital gains tax.

It should also be noted that the transfer of assets between cohabiting couples by court order under the Redress Scheme is also exempt from capital gains tax.

Capital Acquisition Tax (Gift & Inheritance Tax)

Unlike capital gains tax above, regardless of not living together while you remain legally married or in a civil partnership, you will be exempt from Capital Acquisition Tax.

If you are divorced or your civil partnership dissolved, a court may order property to be transferred between you. You do not have to pay Capital Acquisition Tax on court ordered property transfers.

Need help with your Taxes? Call Vanessa on 0860791476.

When you are beginning with a new company you will need to be sure you deal with all the requirements and comply with the law. This is a list of a few steps to take…

Let us help you get started.

Firstly, what is a Limited Company?

A Limited Company (LTD) is also called ‘A Private Company Limited by Shares’. It is the most popular company structure in Ireland.

A Limited Company has limited liability and a share capital. The people who own the shares are called shareholders or members. The LTD company can have 1 Director and 1 shareholder.

We are available by email duffytaxation@gmail.com

What do you need to set up a new company in Ireland?

• Director, Company Secretary and Shareholders

• Shares and ownership structure

• Registered office and business address

• Company name and documents

• Company seal

• Opening a bank account and registering for tax

steps to set up a company in Ireland in detail

1. You need at least one Director

A Director – you need to appoint at least one. The Director is accountable for controlling the Limited Company for its shareholders. In small companies, the directors and shareholders are often the same people.

All Irish companies have to have at least one Director as a minimum and they need to be a resident of an EEA country. If all Directors of your company are living outside the EEA, then you must have a non-EES bond in place.  Please ask us for details.

For instance, if you have a Director who is resident in Ireland and another Director who is resident in the USA, you can incorporate a company without buying a bond.

If the only two Directors are resident in the USA, you will have to buy a bond before incorporating a company in Ireland.

2. Appoint a Company Secretary

If your company has one Director, you need to get another person to be the Company Secretary. If you have two Directors (or more), one of them can also be the Company Secretary.

The main job the Company Secretary has to file Annual Returns each year. The Company Secretary works with your accountant to make sure that your accounts are filed within the time limits. Late filings with the Irish Companies Office will mean that your company will be fined by up to €1,200 and your accounts will have to be audited for two years.

3. Have at least one owner

The owners of your company are called shareholders. It is very common in new companies for a Director and the Company Secretary to be shareholders in the company.

4. How many shares you want in your company

Whoever owns the shares owns and controls the company.  Generally, shares are for a nominal amount like €1 or 1 cent each. So if 2 shareholders have 1 share each, then they own 50% of the company each. You give shareholders shares when you’re setting up a Limited Company. There are two things to think about and both are needed when setting up a company in Ireland.

The amount of ‘Authorised shares’ is the maximum shares you can issue.  The amount of ‘Authorised shares’ you have has no effect on the value of the company.

‘Issued shares’ are the shares that are actually given to and paid for by shareholders. If you give 100 shares to one person then that person will own 100% of the company. It’s the number of shares that you give or issue that decides who owns the Irish Limited Company.

We recommend that your limited company has 100,000 authorised shares and that you give shareholders 1 or 2 shares

5. The Registered Office Address and Business Address for your Limited Company

You need a Registered Office Address and Business Address for your Limited Company when registering a company with the Companies Registration Office. The Registered Office Address is the official, legal address of your company. It must be a physical address in Ireland and you need to be able to get paper delivered to that address.

The Business Address is where your company is carrying on the business. If you’re running an online business or working from home, you may want to look into a mail box for your post.

If you want to go ahead then contact us at duffytaxation@gmail.com to get started.

6. What company name do you want

When you set up a Limited Company, your new company name may be the first thing you want to decide on. Your Limited Company name must be unique and distinguishable when you compare it to other names already registered with the CRO. The CRO will do name checks and if your name isn’t very clear against other companies, your company name will be rejected.

7. Prepare and sign the incorporation documents

9. Set up a business bank account in Ireland

Once your company is set up, you will need to keep the limited company sales and purchases separate from your private affairs. To open a bank account you usually need to have at least one meeting face-to-face, however as a non-resident, there is a new option now to do it all online – please contact us to get details. You will also need company documents – including the original certificate of incorporation, your company constitution and a copy of the A1 form.

10. Registering for taxes

All Limited Companies register for Corporation Tax once they are trading. Find out what other taxes new companies need to register for.

• Corporation Tax
  All companies in Ireland are assessable and have to pay Corporation Tax, no matter how large or small. To qualify for 12.5% Corporation Tax, you need to prove that you’re actively trading and centrally managed in Ireland.
  Even if you don’t qualify for 12.5% Corporation Tax, you still need to register with Revenue for tax and you are subject to Corporation Tax at 25%.
  You or your accountant have to file all payments and returns online through the Revenue Online Service (ROS). Your agent (i.e your accountant) can advise you and submit returns on your behalf. Your accountant will also have access to your ROS account.

• Value Added Tax (VAT)
  Over a period of 12 months, if your business generates a turnover above €75,000 ( if selling goods ) or above €37,500 ( if selling services ), you will need to register for VAT. This is a rolling 12 months, not annual. That means that you can register for VAT at any time you estimate your business sales may exceed the threshold.  What that means is that if you are selling services when your sales are more than €3,000 you need to register.
• You can register your company for VAT with Duffy Taxation Services. Once your company is registered, you will get a VAT number to use on your invoices and you will also be able to reclaim the VAT on business expenses.

• Relevant contracts tax (RCT)
  You need to pay RCT if you are a principal contractor. This is someone who pays a subcontractor to carry out activities on behalf of your business. This applies to subcontractors in these ‘relevant’ industries: construction, forestry, and meat processing.

• Employers PAYE
  If you plan to employ people, you will have to register as an employer and operate a payroll. You are responsible for deducting the appropriate PAYE tax, USC, and PRSI from your employee’s wages on or before they are paid. Directors are employees so if you want to pay yourself wages you will have to register for PAYE.  This can be a time-consuming task and you may consider outsourcing payroll to Duffy Taxation Services.

11. File Annual Returns with the Companies Registration Office and know your statutory Annual Return Date (ARD)

Once you have incorporated your company, your company will have an Annual Return Date allocated to it.

Your first Annual Return is due 6 months after you set up your limited company. It is important to note that you have 28 days from your ARD to file your annual return. Your accountant and Company Secretary will advise you on this. The first Annual Return includes details about your company.

As ever, this is another service Duffy Taxation Services  provides so we can do that for you.  There are no accounts to be filed with this Annual Return.

Your second Annual Return is due 12 months after your first Annual Return. Your accountant will need to prepare a balance sheet, profit and loss account, directors’ report and sometimes, an auditor’s report every year. Subsequent annual returns and financial statements are then filed on this date every year.

12. What you should know if you are late filing

If you are late filing your first Annual Return form, your company will be fined €100 and then €3 per day after that. This penalty is up to €1,200 per year. If you are late filing any subsequent B1 forms, you will have to pay the fine and your accounts will be audited for 2 years.

13. You will need to file a Director’s Income Tax Return (Form 11) before 31st October each year

A company director has to file an Income Tax Return every year. A non-proprietary director (someone who owns less than 15% of the shares in the company) can file a Form 12 Income Tax Return.