Indian rental income and the offshore assets clampdown

I'm working in Dublin for the last year while my husband (who was working here earlier) is currently living and employed in India. While we don't have any deposit or significant income in bank accounts in India, we have a couple of properties in India in joint names. One is rented out and the rental income from that is being used to pay the loan on the other home (where my husband stays).

Also any money we transferred from here to India has been used to pay the home loan/mortgage. What do I have to declare in relation to these offshore assets.

Ms N.D., Dublin

With yesterday’s deadline for voluntary declarations ahead of Revenue’s promised clampdown on undeclared offshore assets and income, the Q&A postbag has been weighed down by queries from people like yourself struggling to make sense of the rules and their obligations.

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The good news for you is that you have nothing to worry about.

In general, income from a jointly owned property would be split evenly between the owners. On that basis half of the rental income on the second property in India would be attributable to you.

You appear to be tax resident in Ireland in that you have spent the whole of the past year here. That might lead someone to think that you would have a tax liability here.

However, you are Indian and born in that country. Your husband lives and works there, and the only properties you own are there. In effect, India is the country that you might call home if you were asked. The importance of this is that, for tax purposes, the somewhat arcane concept of domicile comes into play.

Essentially, for most people their country of domicile is the place of their birth even if they later travel abroad. You can change domicile and people like refugees fleeing political oppression might take the domicile of their new home country. But most people don’t. I know people who have spent their entire working life in the UK but still consider Ireland their home.

For you, a reasonable interpretation is that India is your domicile. Under Irish tax law a person who is tax resident here but not domiciled in Ireland pays tax only on their earnings here and on any assets they buy and sell in this country – like property. In addition, they are liable for tax on any other money they bring into the State.

As the rental income from your family’s investment property is staying in India and is being used to meet the cost of financing your home there, you are not liable to tax in Ireland on that money and you have no need to notify the Irish Revenue about it.

As an offshore asset it becomes of interest to Irish Revenue only when you either:

– Bring the rental income into Ireland, or sell the property and bring some of the proceeds into Ireland, or;

– You decide you are moving permanently to Ireland and that it is the country you would consider home. At that point your domicile could change and that might have tax issues for you. It would be something to consider carefully if that particular situation arose as domicile is a very nebulous concept, even legally.

The important thing for now is that you have nothing to worry about.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.