I have reduced the rent but will I have to pay tax on the full amount?

Q I have reached an agreement with my tenants to defer half of their rent due for the months of April, May and June while they are out of work due to Covid-19. Am I still liable to pay the full tax owed on the rent for that period when I file my return later this year, or will I only have to pay tax on the portion I receive?

A Technically speaking, rental income is taxable on a receivable rather than on a received basis, according to the CEO of Taxback.com, Joanna Murphy.

This means you are required to pay tax on the full amount. So, if your contract is for €1,000 per month, you will have to pay tax on €12,000 annually, regardless of whether the full rent is actually received or not.

However, if at a later stage it is found that the tenant has defaulted on the agreement, and the rent or portion of it is not paid at all, you can apply to make a revised assessment, Ms Murphy said.

Relief can then be claimed for that part of the rent, as your rental income will have been reduced accordingly. However, as the return for a particular tax year is filed at the end of October of the following year, you won’t need to account for this year’s rental income until 2021.

This will give time for the situation to play out and you will know where you stand as regards what rent has been paid and what hasn’t by the time the corresponding tax return comes round. In that case, it is likely a revised assessment would not be needed.

No recent guidance has been issued by Revenue in this regard, Ms Murphy added.

Q I am in the process of renewing the home insurance and wondered if I have insured it for the correct amount. Houses on my street go for about €420,000, so I figure I should insure it for that amount and the contents for about a quarter of that. Is that about right?

A There has always been a lot of confusion when it comes to how to value your home insurance. Rather than focusing on the sale price, you need to look at the rebuild cost of your house, according to Deirdre McCarthy, of Insuremyhouse.ie. The Society of Chartered Surveyors has a useful calculator on its website that will give you a good indication of this cost. Once you have worked this out then you must look at valuing your contents.

You should go through your home and assess the value of the contents you wish to insure – generally regarded as anything you would take with you if you were to move house, Ms McCarthy added.

She says it is important not to overor under-value your home insurance policy. The former will result in you needlessly paying higher premiums, while the latter could mean that if you had to make a claim you would not be covered financially as much as you need to be.

Q My work is temporarily suspended and I’m looking after our 13-month-old full-time, while my wife works. The little guy likes his naps, so I have a bit of time on my hands. I have made a bet with my wife that I can save us €1,000 on our yearly expenditure. The prize is Sunday lie-ins for a month. How do I win this bet?

A This wager is a source of entertainment. But it could possibly be a very lucrative one, both financially and sleep-wise, according to the CEO of the Credit Union Development Association, Kevin Johnson. Consider switching your mortgage, particularly if you haven’t done so in more than three years.

For many, this is a sure-fire way of saving money, Mr Johnson says.

If you have a credit card balance that you are struggling to get down, consider taking out a short-term personal loan to clear it, cancel the card and just use a debit card from now on, he added.

If your car insurance renewal is coming up, then make sure you shop around for your cover or get a broker to do it for you. Do not just accept the renewal price quoted. Some motor insurers are now offering small rebates on premiums, because they know that there are fewer cars on the road, so it’s less risky in terms of claims.

Also, review your home insurance if it’s due soon. Health insurers are also refunding some premiums to policy holders. So look into this and reviewing at renewal, Mr Johnson says. Banking fees and charges can add up over the years, so consider switching. Use a cost comparison website to figure out which energy provider could offer you a better deal. You could also look at switching your phone and broadband provider.