renting out family home and tax question

My partner and I are seperated. We couldnt sell house in current climate. We both left and it was empty for considerable time while we weighed up options. We then let it to another couple. Plan (very loose) is to hold out till market returns and sell. I was told recently that since it is let out and neither of us live their that it is not a family home anymore and is technically an investment property and therefore when we sell we will be taxed on any profit as if it was a family home. We lived there for 12 years ffs and its only rented out a few months. She lives in rental property now and I live in my parents house. Is this true? that we would be taxed on any profit from sale. Also any info on tax of rental income (which doesnt fully meet mortgage) would be appreciated.

surf on
edd

In general terms once you vacated your home it ceased to be your PPR.

Once you rented it, it became an investment property meaning it should be registered with the PRTB, your TRS should have ceased, you are liable for the NPPR tax and you need to make tax returns for the rental you receive (it's income). Your insurances on the property and your mortgage may also need to be altered.

Some pertinent info here - http://www.irishlandlord.com/index.aspx?page=infocentre_articles&category=Finance%2c+Tax+%26+Insurance

The other issues relate to possible stamp duty clawback and CGT on the sales proceeds for the period it ceased to be your PPR not just the time it was rented.

Surfineddie, CGT would apply to the proportion of the capital gain relating to the period when the house is not your main residence. Though for the first year in which it was not your main residence it will still be considered your main residence for CGT purposes.
So, for example, if it was your main residence for 12 years and then was either rented or vacant for 6 years, then only 5/18 of the gain will be subject to CGT. Plus you get to deduct the buying and selling expenses (including stamp duty, solicitor's and estate agent's fees etc.) and any improvement costs.

As you bought the house so long ago, there will not be any clawback of stamp duty (there was no difference in stamp duty between owner-occupier and investment properties back then).

The most urgent thing for you to do - register the property with PRTB (if not already registered), as otherwise you can't claim interest on the mortgage against tax. Also inform the Revenue that you are no longer eligible for TRS and pay NPRR.

Mathepac also makes a good point about your house insurance and your mortgage.

Wow thanks guys. Thats all good. I really chuffed with the fact that the amount of time we were there reduces cpt cause its likely we will have to sell, just holdin out in case market improves. It will long term but its a game of how long we can wait and hoping things dont dip more for a period before we sell. Thanks again, I genuinely feel better now

You could have sold it, you simply did not drop the price low enough., and what if the market doesnt improve which is predicted by many, you will be waiting a very long time.

I recently bought a new home and was thinking about renting, but to be honest all the hassle and added tax of renting put me off, and my house is currently on the market.

What with having to register it with the PRTB (and pay that fee every time your tenant changes), pay the €200 annual 2nd home NPPR tax, change your insurance over to a landlords, maintain it, pay tax on the rental income at 41%, then pay Capital Gains Tax on the remaining 12years of my mortgage, lose my tracker, have to pay an accountant annually to submit my tax returns etc, I just lost interest in it all and thought having one propery would be SO much handier.

As someone mentioned, you may just have to take a hit and reduce the property to a price that will definitely sell. Too many people are holding out for unrealistic prices they ain't ever gonna get for their house, and they are lying unsold because of it. I put my house on the market at a very realistic price, well below others in the area, and I had a viewer in the 1st 2 days who is very very interested.

To quote the film, if you reduce it, they will come!!

Good luck.

ostrich mentality

Irish people are not coping with the post tiger era trends. The ostrich mentality is to the fore. They fully embraced it when everything was going up, now the same people cannot look you in face anymore.

A French family who stay with us every 2 years, recently commented that the the same houses for sale now were on the market 2 years ago when they last visited. I have to explain to them that half have not paid their mortgages and are on their way to court, and the other half are ostriches
waiting for a miracle.

What about people who have to move but can't because they're in negative equity? I know quite a few people who are renting properties appropriate to their needs and simultaneously renting out their previous home because of its unsuitability. They simply cannot sell the property even if they wanted to because the proceeds would not come close to clearing the mortgage.