Rental income versus paying rent

D

Davidn

Registered User
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4
Hi,

Would love some clarity around this issue.

My wife and I currently rent a house in Dublin, my wife also has an apartment so we are essentially 'accidental landlords', we obviously want to keep our financial affairs in order but very confused about our liabilities with regard to the rental income.

The rental income does not cover the mortgage, the difference is negligible but higher than the income all the same, we don't gain, we operate that as a separate part of our lives, it's a small apartment and does not suit our needs, the rent we pay in the house is more than the income from the other property.

Rental income €1200 (apt)
Mortgage €1205

Rent paying €1350

Can someone explain what our liabilities are?
 
Hi David,

The rent you pay is seperate and unrelated to your rental income or the liabaility you have as a result of the rental income.

The tax you will be liable for will be on your rental profit. Your rental profit is the difference between your rental income (1200) and you rental expenses.

You rental expenses include 75% of the interest you pay on your mortgage repayment of 1205. It also includes any other costs such as capital expenditure on the house and estate agent fees. For more info on the types of expenses you can deduct from your rental profit you shoudl refer to the revenue website and search it or just google search it.

The reason why you only deduct 75% of the mortgage interest is because the capital element of your mortgqge repayment is an investment by you in the equity of your property whereas the interest is the cost of borrowing your mortgage - hopefully that makes some sense.

Jim.
 
jim said:
Hi David,

The rent you pay is seperate and unrelated to your rental income or the liabaility you have as a result of the rental income.

The tax you will be liable for will be on your rental profit. Your rental profit is the difference between your rental income (1200) and you rental expenses.

You rental expenses include 75% of the interest you pay on your mortgage repayment of 1205. It also includes any other costs such as capital expenditure on the house and estate agent fees. For more info on the types of expenses you can deduct from your rental profit you shoudl refer to the revenue website and search it or just google search it.

The reason why you only deduct 75% of the mortgage interest is because the capital element of your mortgqge repayment is an investment by you in the equity of your property whereas the interest is the cost of borrowing your mortgage - hopefully that makes some sense.

Jim.
Click to expand...
Hi Jim,

Thank you so much, that's really helpful.

Can you include management fee's as part of your rental expenses?

So if the interest on my monthly mortgage was for example €800 I can write 600 off per month? or €7200 per year? then add in other expenses associated with the rental?
 
Everything you need to know is covered here. First page has an example of how you should get all your figures in order.
 
You will so need to register with PTRB every time you have a new tenant, you won't be able to claim the 75% interest as an expense without. Also if you are still in receipt of TRS you will need to advise revenue that this is not your PPR and they will cancel the payment.
 
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