Advice on whether to rent or sell house

[joe bloggs 2]

Hi there,

Need some advice. 18 months ago my partner and I purchased our first home. We were eligible for stamp duty on it and currently get mortgage interest relief. However our situations have now changed and we are looking to either rent the house or sell it on. Unfortunately the value of the house has dropped about 15% since we purchased it.

So we are looking for some advice. If we rent it, do we lose our mortgage relief and will this impact on the stamp duty allowance we received? What tax will we have to pay on the rental income? What else should we be looking out for?

Or if we sell the house, again what should we be looking out for? Do we need to repay the stamp duty etc as the house would be sold within 2 years of purchase.

Just looking for advice on this and would appreciate any wisdom on the matter or what we should look out for. We are undecided which is the better option, rent or sell.

Thanks for any help.

 

[daveyboy]

Get professional advice before doing something costly

If you are renting your former principal private residence:-

you have to register with PRTB
you will have to get a BER to register
you will lose your mortgage interest relief at source (although you will be able to offset rental "profit" with 75% of the motgage interest)
you will have to do a tax return - rent is income but you can offset costs (including the 75% of mtg interest paid)
you will have to pay the local authority tax on non pprs

I know the feeling, but if you can hold on to the place and pay the mortgage at all, why sell at the lowest point in the market?? I would be loathe to sell but I would make sure you know what renting means. THe system is not set up to treat those who rent properties (who are not bid time property owners) well! Its take take take!

 

[WaterSprite]

If you rent within 2 years you have to pay the difference in stamp duty. If you sell the house within 2 years, you don't.

 

[joe bloggs 2]

If you rent within 2 years you have to pay the difference in stamp duty. If you sell the house within 2 years, you don't.

WaterSprite - dont quiet understand what you mean by this, could you elaborate on it for me please? If we sell the house within 2 years, stamp duty wont affect us. If we sell after 2 years, will it? And the last option - if we rent the house out so no longer the primary residence - what is the "difference" in stamp duty?

Thanks for all the feedback.

 

[WaterSprite]

If you availed of first time buyer's reduced rate of stamp duty when you bought the house, if you rent that house out within 2 years of owning it, you have to repay the "discount" you received in stamp duty (the difference between FTB rate and full investor rate). You can sell the house at any time and not have to pay back any discounted stamp duty. Take a look at the revenue site for information.

I was only referring to that portion of the question as it related to stamp duty.

 

[joe bloggs 2]

If you availed of first time buyer's reduced rate of stamp duty when you bought the house, if you rent that house out within 2 years of owning it, you have to repay the "discount" you received in stamp duty (the difference between FTB rate and full investor rate). You can sell the house at any time and not have to pay back any discounted stamp duty. Take a look at the revenue site for information.

I was only referring to that portion of the question as it related to stamp duty.

Thanks for this explanation. So lets just say for the want of an example, we bought the house in September 2008 for 200,000 and should have paid 10,000 in stamp duty but didnt because we were a first time buyers. So if we rented out the house on the 1st of May, we would have to pay the 10,000 to the revenue? As well as this, would no longer be eligible for a first time buyers allowance on any future properties?

 

[sadie]

We sold our house in 2005, having owned it for 4 years.
Revenue tell me that we can still claim the rest of the 7yrs FTB interest relief on any new house we buy.
Depending on the part of the year the sale goes through you might lose that year as it seems to run from Jan to Dec (but don't take my word for it).

It was a bit unclear as the rules have changed since we owned a house.
There is a Revenue Helpline if you ring them they will give you a broad idea of what you are entitled to:

Revenue TRS Helpline 1890 46 36 26

 

[WaterSprite]

Thanks for this explanation. So lets just say for the want of an example, we bought the house in September 2008 for 200,000 and should have paid 10,000 in stamp duty but didnt because we were a first time buyers. So if we rented out the house on the 1st of May, we would have to pay the 10,000 to the revenue?

Yes

As well as this, would no longer be eligible for a first time buyers allowance on any future properties?

Yes, you wouldn't be eligible for FTB rates of stamp duty (but see the last post for FTB mortgage interest relief, which is different).

Read the Revenue link - it has all the information from the horse's mouth.