Income Tax and Investment Property – Why Place it on the Long Finger?

The phone call

One lunch time while sitting down to have a well deserved cup of freshly ground coffee, my phone rang. I answered it and I started a conversation with a young man who was obliviously uncomfortable with the whole idea of dealing with a tax advisor. Let’s call him ‘M’!

M had come to me as a referral from existing income tax client. He owned an investment property and didn’t know how to deal with the tax situation. He searched on the internet and visited all the chat rooms and got a list of different answers as long as his arm. The pinnacle came when a colleague from work, some years older than himself heard about his situation and informed him that, “he’d have to pay a bucket load of tax…” Of course, this response led him to a number of sleepless nights until a friend (my client) gave him my number and told him to go and have a chat with me.

The above is a classic situation of numerous phone calls that I receive. Where people have worried themselves and missed numerous hours of sleep worrying about a situation that can be rectified (almost!) by a phone call to a friendly tax advisor or accountant. The hardest thing is making that call!

The solution

M’s situation was no different to any other person possessing an investment property and after a friendly chat over the phone, I could hear his spirits lifted. We arranged to meet that afternoon. I told him exactly what needed to be done and the information that I would need to complete his income tax computation and his income tax return. The work was started the minute the information was received and the computation was completed by the following morning. We had one more meeting listing his exact liabilities (it actually turned out that he was due a rebate!), we signed off and the income tax return was filed with the Revenue Commissioners. M left my office as a new man. So why did he leave the situation run for so long? The answer is probably fear. He feared receiving an income tax bill and he probably thought the situation would go away, but it doesn’t. The liability remains and it won’t go away. Therefore, make the call and get it sorted.

“Can I complete my own income tax return?”

Yes, why not? But I don’t recommend it! I wouldn’t try to write my own taxation software package, even though I know how it works. I would simply just buy it. I know that it will work correctly and if it doesn’t, I know that I’ll have the support there when I need it. The same goes for your tax returns. Get proper advice and get it done correctly. If anything, it will give you peace of mind knowing that it’s completed correct.