It is important to claim all the tax reliefs and credits you are entitled to when filing your tax return — and to write any tax-deductible expenses off your tax bill. However, claiming reliefs you are not entitled to could land you in trouble with Revenue.
One area in which you could easily slip up here is the tax relief on medical expenses. Not all medical expenses are eligible for relief and it can be easy to get confused between those that do and those that don’t.
“Tax relief is allowable on medical expenses, but routine dental (such as fillings) and optical expenses are not eligible for relief,” said O’neill. “Physio costs can be treated as medical expenses — if availed of on referral from a GP.”
Similarly, landlords are entitled to write certain expenses off their tax bill for rental income, but they don’t always get it right. Some landlords mistakenly believe they can write the full cost of the mortgage repayments on the rented property off their tax bill. This is not the case.
You cannot write the full cost of mortgage repayments off your tax bill, and you can usually only write-off 75pc of your mortgage interest against rental income earned in 2016.
When filing 2017 returns next year, landlords will be able to write off 80pc of the interest.
Furthermore, landlords are only entitled to write off expenses that arose while the property was let, (though under Budget 2018, owners of vacant properties will be able to write off pre-letting expenses in certain circumstances).
“When writing expenses off your rental income, you must review the nature of the expense, periods the property was not available to let, whether tenants receive social housing support and so on,” said Reilly.
Landlords must be careful not to overlook any tax-deductible expenses: “Where rental income is taxable, deductible costs might be missed — such as capital allowances on the initial fit-out of the house and life assurance on the mortgage,” said O’neill
Another area for mistakes is investments — particularly how you record and treat those investments in your return, according to Reilly. “Investment funds is a particularly tricky area of tax legislation to navigate,” said Reilly.
Consider getting some professional advice before filing your return if you have complex dividends or investment portfolios.