Requirement to Register Tenancies – Reminder

This e-Brief is being issued as a reminder to parctitioners of the provisions of Section 11 FA 2006, referred to in Tax Briefing 63, namely that customers seeking entitlement to a deduction for interest paid on borrowed money employed in the purchase, improvement or repair of a rented residential property, must comply with the registration requirements of the Residential Tenancies Act 2004. This change applies to interest paid by individuals during the year of assessment 2006 and subsequent years and by companies for accounting periods beginning on or after 1 Jan 2006.

Section 11 FA 2006 amended the computational rules in section 97 TCA 1997 for determining the amount of rental income chargeable to tax. Where a landlord is claiming an interest deduction under the normal self-assessment system, he/she is required to state on the annual return of income that they have complied with the registration requirements by ticking a box on the Form 11/11E at line 203.

It should also be noted that if it is discovered that a landlord has failed to comply with the registration requirements for a chargeable period, any interest relief that has been claimed will be withdrawn. Such a withdrawal of interest relief may result in an underpayment of tax and expose the landlord to interest and penalties.