Buying a second house

[dino]

Hi folks,
I bought a house in my home town about 18 months ago. I had hoped to live in it but I have now moved to Cork with work. I would like to keep my house and buy another house in Cork. My house has jumped in value considerably so I intend releasing some equity as a deposit. I have been told that i will incur a stamp duty clawback if I rent out my PPR within 5 years so i was thinking of leaving my house in my hometown as my PPR and buying a second house in Cork as an investment property.
Does this sound like a good idea? I understand that I will pay a higher rate of Stamp duty as an investor but are there any other pitfalls?

Thanks,

D

 

[Madra]

Your PPR is the house you are resident in. You cant say your present home is your PPR if you're actually living in the home in Cork. I presume your plan here was the 'declare' your PPR to be whatever suits tax wise and not commute to Cork.

 

[dino]

Hi Madra,
I'm not really sure so that's why I was asking the question. I guess the best bet is to buy a new PPR in Cork and change my existing house to an investment property.
So how do I go about paying a stamp duty clawback? I bought the house for €185,000 a year and a half ago so I was below the stamp duty threshold at the time. How will they calculate my clawback? Is it the difference between the rates at the time? Is it 3% of 185K= 5550 or is this reduced as time goes on?

 

[ClubMan]

How will they calculate my clawback? Is it the difference between the rates at the time? Is it 3% of 185K= 5550 or is this reduced as time goes on?

If you rent a property (other than under the owner occupier rent a room scheme) bought as a PPR within five years of purchase then the clawback is whatever an investor would have paid for the same property at the time of purchase - it is an all or nothing clawback and it does not reduce based on how much of the five year period has elapsed. I'm not sure what the applicable rate would have been at the time of your purchase but Revenue should be able to tell you. The clawback is payable as soon as the property is rented out.