What is a Form 12?

There are a number of reasons why Revenue may send you a Form 12. Sometimes they send these out if they believe you have other sources of income besides PAYE income. A number of Form 12's are also sent out randomly to taxpayers.

Regardless of whether or not you receive a Form 12 from Revenue, if you are receiving rental income you must declare this even if you are not making any profit on this income. As the rent you receive is additional income, outside of any PAYE income you have, you must file a self assessed income tax return and pay any tax due on or before the October 31st. If you rental profit is above €3,174 or not coded into your tax credits you must file a Form 11 instead of a Form 12. In this case you must register for income tax by completing and submitting a Form TR1 to Revenue.

Lots of people in your situation assume they do not have to file a return because their mortgage is bigger than the rent they receive on the property. However it is important to note that you still must file the return regardless of whether you are making a profit. In your case you will need to file two years returns together so I would urge you to do this soon. You can fill in the form yourself or you can use the services of an Accountant. You will need to arrive at a profit or loss figure. You will arrive at this figure by deducting all allowable expenses on the property from the rent you have received.

One area owners often get wrong ion calculating their profit or loss is the issue of mortgage repayments. It is important to stress that only the interest you are repaying on your mortgage is allowed as a deduction and for residential property this is now limited to 75% of interest. You cannot claim relief on any of the capital repayments you make against your mortgage. The property must also be registered with the PRTB for the interest charge to be allowed as a deduction.

Date published 20 Aug 2013

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.