Dominic Coyleanswers your questions.
Rental offset relief
We are due to move house shortly to a newly built property on which we signed the contract last April. This is to be financed by selling our existing house. Unfortunately, the value of our existing house has fallen since then and we are considering raising the finance of the new property against our existing house and letting it (our existing house) until the market recovers. Our borrowings will far exceed any rental income we will receive. Can my rental income be offset against my borrowings? What tax liability will I have?
- R McA, Dublin
It's a nice idea and one that would provide some succour in these challenging times for property sellers but, unfortunately, you will not be allowed to set your rental income off against your borrowings.
While mortgage interest relief will apply in relation to any borrowings made for the purchase of your new home - subject to the existing ceiling on such relief - there is no provision to allow you set rental income from one property against your borrowings on a separate property.
The Revenue tells me that for rental income to be allowable against borrowings, the loan would have to have been used to buy, improve or repair the rental property. This is so even if you finance your new home by two separate loans, one of which is expressly secured against your existing home. In relation to tax liability, you are liable to income tax on any rental income and this must be declared to the tax authorities. You can mitigate your liability somewhat by claiming against rental income any applicable rates, management fees, insurance and repair/maintenance costs.
Disclosing Dirt
You have certainly set the cat among the pigeons with your article on Dirt tax. Fifteen months ago I started putting my "running away money" (I am 75) into AIB special saver. I chose it because Dirt is taken off automatically. He-whom-I-am-not-running-away-from would really know about my business. We also have a joint account and I have never worked since I married. It seems ridiculous that it has to be declared again? Any way out of that?
- WB, Dublin
According to the rules, you are required to file details of interest earned along with all other income in your tax return - jointly or separately, depending on how you operate.
This is because, while you are not liable to any more income tax on the interest, you can have PRSI or health levy obligations. However, I don't imagine that either would apply in your case.
Will the taxman coming gunning for you? Probably not, but rules is rules, as they say.
Share Certs
Two weeks ago I wrote about Vodafone share certificates which, a correspondent claimed, never arrived following the company's stock reorganisation, leaving one reader with a bill for a reissued certificate.
The item drew a considerable postbag from readers and financial service professionals reporting similar problems. I suggest anyone in this position contact Computershare in Heron House, Corrig Road, Sandyford Industrial Estate, Dublin, to make their case. Both these share certificates and any Vodafone dividend cheques emanate from the same company, although not necessarily the same office. If you have received one, it would be strange that you did not get the other.
• Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by e-mail to dcoyle@irish-times.ie.
This column is a reader service and is not intended to to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
