Q&As: Your queries on tax returns
I’m drawing up my self-assessed tax returns.
I see made a lot more money than I thought last year. But the downside is that I’ll have to pay a lot more tax – at the higher rate too. Can I make a last-minute pension contribution to help reduce the bill at this stage? And can I extend the deadline by filing online?
The Revenue Commissioners provide tax relief at the higher rate on contributions to your pension.
The good news is that you can avail of tax relief at the higher rate through Additional Voluntary Contributions (AVCs).
The normal deadline for making these and filing your returns is October 31.
But you can normally extend this to November 10 for both filing and making the contributions as long as you both pay and file your tax online. However, in 2020, due to the Covid 19 pandemic, if your turnover is down by 25% you can put off paying until next year as long as you file in 2020.
However, you have to be already registered with Revenue Online Services to use the online filing system. If you’re not registered then your accountant should be.
If you don’t have an accountant, you’ll be hard pressed to find one at this late stage as they will be snowed under with returns. But you might be lucky.
I’ve run an Airbnb business from my home (my main residence) for the past two yrs. What is my tax situation?
Airbnb has handed over details of the identities and earnings of their hosts to the Revenue Commissioners, as it is legally obliged to do.
And Revenue has made it clear that Airbnb rentals don’t qualify for tax-free status under the rent-a-room scheme, which allows householders to earn up to €12k free from income tax and CGT (€14k from next year).
They see Airbnb rentals as non-residential and therefore similar to BnB rentals ( the similarity of names doesn’t help anyone trying to claim otherwise!)
So without the protection of the RaR scheme, Airbnb hosts are exposed to both ongoing income tax and potentially Capital Gains Tax (CGT) when they sell their home.
The income tax liability is clear but the CGT situation is not as the Revenue Commissioners haven’t quite spelled out how occasional Airbnb lettings affects your home’s status as a Principal Private Residence (PPR) that would be usually exempt from CGT.
What they do say in their guide to PPR relief is that it’s “given in respect of the gain accruing on the disposal of a dwelling-house (or part of a dwelling-house) which is a person's only or main private residence. Where only part of the dwelling-house qualifies, the gain is apportioned.”
A number of experts in this area I consulted about this advised that an argument could be made for PPR relief still applying to the room in the case of very occasional usage.
But this should not be taken for granted. And if you have used the room consistently, brace yourself for a potential CGT liability on that portion of your home for the period for which it was let or was advertised as available.
I’m sorry I can’t be any clearer than that but it remains a grey area that has yet to be tested as the Airbnb concept is fairly new.
I filed my tax returns for 2015 already but my tax bill was higher than expected. I still have an overhanging property tax bill that hasn’t been paid. Can they penalise me for this through my tax returns?
Pay it as soon as you can. Property tax (LPT) compliance is enforced by penalties applied by Revenue through the tax system.
They can impose a 10% surcharge on your income tax and capital gains tax liabilities if you’re not LPT-compliant.
Can I claim medical expenses relief on sight testing and new glasses? If not, what can I claim for?
You cannot claim relief for routine sight testing and provision or maintenance of glasses and contact lenses.
Expenses which qualify for the relief include doctors’ and consultants’ fees, prescription medicine, physiotherapy, non-routine dental treatments and routine maternity care which have not been reimbursed by a medical insurer.