sell and buy V rent and rent

D

darkbeatz

Registered User
Messages
21
Hi All,

My wife and I are thinking of selling our house at the moment. As the Market is slow enough we are putting a time frame on how long to leave it on the market. If the house does not sell we may rent it out and rent a house where we want to move to. Our mortgage at the moment is €980 and we would probably get 800-850 rent for it so we would have to put 100 odd euro a month towards the rent also.

So I am wondering how this would impact us financially and legally.

1. We have TRS for another 3 years, if we rent out would we loose this?
2. If we rented out and then sold it in a year or 2 would we be liable to pay tax on it?
3.What would we be entitled to as tennants in a rented house?
4.Is there anything else we should be thinking of?

Thanks in advance
 
darkbeatz said:
Hi All,
1. We have TRS for another 3 years, if we rent out would we loose this?
2. If we rented out and then sold it in a year or 2 would we be liable to pay tax on it?
3.What would we be entitled to as tennants in a rented house?
4.Is there anything else we should be thinking of?

Thanks in advance
Click to expand...

Im no expert but on point 1, I think you would loose the TRS if you rented it out as you would have to inform revenue.

you would be liable to pay tax on rental income-75% of your interest payments and a few other things.

You are intilted to claim a small amount of money back as renters but its not a huge amount.

See

If you inform your mortgage company you are renting your house out they will put your mortgage on a investment rate and that is significanly more than you are paying now.
 
On your point about tax on rental income. as we would not be making any profit on it would we still be liable for tax?
 
darkbeatz said:
On your point about tax on rental income. as we would not be making any profit on it would we still be liable for tax?
Click to expand...

Yes I am afraid you would. You pay tax on the income earned not just the profit.

You are going to need to do a bit of research on this issue, I am in a similar suituation than you by the way
 
darkbeatz said:
On your point about tax on rental income. as we would not be making any profit on it would we still be liable for tax?
Click to expand...


You pay tax on the net rental profits.

= Gross rental income less 75% of interest less other expenses (search for these)

Example

800 pm rent

Mortgage interest = 800, 75% = 600
Other expenses = 100 pm

You pay tax on 800 - 600 - 100 = on 100 pm of profit.
 
lionstour said:
Yes I am afraid you would. You pay tax on the income earned not just the profit.

You are going to need to do a bit of research on this issue, I am in a similar suituation than you by the way
Click to expand...


Be careful here. You do not pay tax on the gross rental income, you pay tax on the net rental income after deductions, like 75% of interest and other allowable expenses.


http://www.revenue.ie/en/tax/it/rental-income.html
 
I'm possibly going to be in a similar situation. Myself and my partner both have our own gaffs. Due to location of mine and size of his one moving into the other is not an option. Selling either place is not really an option either as we won't get anywhere near what we have paid for them, makes more sense to try and hold onto them for now. We have found a great bargain and want to buy this together if possible, the mortgage on it should be about €900 pm.

Location of his apartment means he will have no issue renting it out and we think we already have a tenant for it. Mine is further out of city and I already have a person living with me in one of the rooms so if we buy I will be renting the other room out as well.

I fixed for 5 years back in August of 2008 (they would not give me the money otherwise). He is on a variable mortgage rate since March 2006. I'm wondering how my fixed rate will be effected if we do go ahead and buy together? Would this mortgage have to be changed to an investment mortgage? I asked them about breaking out last year and was told they would for around €8K breakage fee. If I had to change to an investment mortgage would I have to pay the €8k breakage still?

Also, what would be our situations be with regard to TRS?

Cheers,
M
 
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