declare house as investment

N

nasdaq

Guest
hello

Hypothectically, what are tax implications, if you are an owner ocupier of a house(and no other house) but you must declare it as an investment because you have been renting it out, under the rent a room scheme but now you are considering leaving the country for a few months?

would you loose your owner occupier status when you sell it then?
would the bank force you to change anything in relation to your mortage rates?
how would the insurance company take if something does go wrong, while in your exiisting policy?

Please advice

Cheers
 
If you cease to be an owner occupier and the property ceases to be your Principal Private Residence then you don't really have any leeway in terms of "declaring" it an investment property. It de facto becomes one. Might be worth checking the for some info on what this means.

would you loose your owner occupier status when you sell it then?

If it ceases to be your PPR then you de facto lose your owner occupier status. If you rent it out then you may be subject to a clawback of stamp duty (if rented out other than legitimately under the rent a room scheme within five years of purchase as an owner occupier), CGT on some portion of the eventual resale gain and loss of owner occupier mortgage interest relief although you would be able to offset 100% of mortgage interest against rental income.

would the bank force you to change anything in relation to your mortage rates?

Mortgage loan agreements often include a clause covering the owner occupier situation and requiring any material alteration of one's situation (such as moving out and renting the property) to be notified to the lender who may, or may not, alter the mortgage loan/rate.

how would the insurance company take if something does go wrong, while in your exiisting policy?

Most owner occupier home/contents insurance policies will not cover a rental property and will not pay out in such a situation so alternative cover may be required.
 
can you clarify?

"although you would be able to offset 100% of mortgage interest against rental income."

Clubman, can you clarify that point? I've had different advice in this regard


See my post

thanks
 
Re: can you clarify?

100% of interest on an investment property loan can be offset against rental income. This is the case if the property is originally bought as an investment or is a former PPR which becomes a rental property as far as I know. The issue of cross financing between a PPR and investment property raised in the topic you mention gives rise to other issues not obviously relevant here.
 
tax on sale gain

Cheers,

what is the difference between tax on profit as an investor and that of an owner occupier?

What happens if you are selling a an investor but using gain to purchase a primary resident home?
 
Re: tax on sale gain

I'm not sure that I understand the question but here goes anyway...

what is the difference between tax on profit as an investor and that of an owner occupier?

The FAQ mentioned earlier summarises the tax implications for rental property owners. Where an owner occupier rents under the rent a room scheme there is not tax liability once the income is under the €7,620 limit. Once it exceeds this all rental income is assessed for income tax and certain expenses can be offset against it.

What happens if you are selling a an investor but using gain to purchase a primary resident home?

When a property which has been rented out (other than under the owner occupier rent a room scheme) at any stage is sold then some of the gain accruing is subject to CGT. Once taxed you can do whatever you like with the remaining gain.
 
tax

Thanks clubman,

I asked the question about the tax on profit, because I thought there was less tax on owner occupiers selling their houses to buy another house. Isn't this the case?
 
Re: tax

I presume you mean CGT and not income tax? An owner occupier is exempt from CGT on any gain arising from the sale of their PPR. Where the property was a PPR and an investment property at different times then part of the gain roughly proportional to the amount of time that the property was rented is assessable for CGT.
 
tax

Thanks for clearing it up.

What does CGT stand for?
 
You must log in or register to reply here.
Back
Top