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Non Principal Private Residence (NPPR) Charge and rental profits

February 17, 2017 Latest News 0 Comment

For years there has been lack of clarity regarding whether the NPPR Charge is tax deductible against my rental income.

Revenue and the Department of Finance had indicated that the payment of the NPPR Charge for residential properties is not an allowable expense in computing taxable rental income as it is not included on the list of allowable items.  A number of commentators had argued otherwise especially on the basis that they felt the levy was a form of rates collectable by a local authority.

So while it did seem to carry hallmarks of a levy it was seen as irresponsible to claim the NPPR Charge as a tax deduction in light of Revenues stated view.

Recently the High Court has ruled that the NPPR Charge is a deductible expense for landlords against rental profits. The annual NPPR Charge of €200 per property applied for all years 2009-2013.

Taxpayers have until 31st December 2017 to submit an amended income tax return for 2013 to include the 2013 NPPR Charge. However, due to Revenue’s four-year time limit for claiming income tax refunds, taxpayers will not be entitled to claim a tax-deduction for NPPR Charges paid in years 2009 – 2012.

In light of the fact that there is strictly a four year time limit for claiming refunds of tax overpaid, 2013 is as far back as taxpayers can amend their returns and claim refunds.  Also the High Court judgement did not specify if the interest and penalties are tax deductible expenses.

It will be interesting to see if Revenue will issue guidance and clarify their position on these two points.

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For related enquiries, further clarification and assistance with Tax matters contact Joe Cunnane at TRA Professional Services

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Joe Cunnane Practice Owner TRA Professional Services       Qualifications:  FCA Chartered Accountant & AITI Chartered Tax Advisor Joe has over 20 years experience working in both private practice and industry ... Read More »