Buying second house as PPR and investment

N

nightlynx26

Guest
Hi lads,
I currently own a house with my girlfriend, paying a mortgage with interest tax relief. I was a first time buyer but my girlfriend was not , so we had to pay stamp duty. Thing is, I work in dublin during the week nearly 200 miles away from our house and I am paying a rent alot larger than my share of the mortgage. So I am looking for advice or an alternative plan....
The house is my ppr. If myself and my girlfriend were to buy a second property here in Dublin..
(a) could i transfer my ppr, what benifit would this have
(b) The new house would also have rooms rented but if it was my ppr , this would come under the rent a room tax law.....????
(c) If it was becoming my ppr, could i get a normal mortgage or would it have to be an investment mortgage.???
All this seems very complicated.
All ideas welcome.
 
From reading your post, it seems you and your partner are joint borrowers on your home?

You can only have one PPR (your TRS is claimed on this). If you buy a new property and it becomes your PPR, the original property will become your investment property and may attract higher interest rates.

Here is a link to some information on the rent a room scheme.
 
Thanks PM1234,
The mortgage we currently have would be a good bit lower than the one for the new house. So if it attracted higher rates would be better than on the new house. Both our names would also be on the new house. Therfore each separate house would be our own PPR but both jointly owned. Is this the best way do you think, and cheapest of course...
 
But you own the property jointly, and you can only have one (joint) PPR. You will have to decide which property you (plural) wish to use as your PPR.
 
But we are not married. Can we not be "separated" in the eyes of the law and have a benificial interest in each others property.
 
From my understanding you may have another option, which I believe is what you may be hinting at?

If you buy a house in Dublin and use it as your PPR you will have to get a mortgage in your own name. Also your girlfriend will have to change the joint mortgage on your current home into her name solely (this might mean 'buying out' your half which could be costly?). Provided you can both qualify for these mortgages on your own merits then you should both be able to claim individual TRS on each mortgage (?).

This way neither property is an investment property. You can both continue to split the mortgage payments on the current property if you wish to do so, and you can rent rooms in the new property (your PPR) and pay the difference yourself, which by the sound of it will be less than the rent you are now paying.

I'm not 100% on the ins and outs of this but if anyone else can clarify anything wrong with this scenario...?
 
Thanks ButtermilkJa, these are the ideas I am looking for. If there are any more out there they would be appreciated. By the way , we are not splitting up , so it would not be "costly" for her to buy me out if she was buying the new property with me anyway.
 
Do you not feel a tad embarrased coming here and asking people who pay all their taxes in full how you might fiddle the system and leave the rest of us with a larger share of the burden paying for hospitals, schools etc.?

Whatever, just be aware that you would each need to pay stamp duty, possibly on transfer between you, I would have questio marks about entitlement to FTB mortgage interest relief, you cross holdings would be subject to capital gains tax and there might be some implication of allowing someone free rent in your property as it could be interpreted as a gift perhaps.
 
Camry said:
Do you not feel a tad embarrased coming here and asking people who pay all their taxes in full how you might fiddle the system and leave the rest of us with a larger share of the burden paying for hospitals, schools etc.?
Click to expand...
Has the original poster actually asked for advice on how to fiddle taxes as opposed to just asking what the tax implications of various scenarios are? :confused:

Original poster should really get professional advice in my opinion.
 
ClubMan said:
Has the original poster actually asked for advice on how to fiddle taxes as opposed to just asking what the tax implications of various scenarios are? :confused:
Click to expand...

It all appears pretty transparent to me:

The house is my ppr. If myself and my girlfriend were to buy a second property here in Dublin..
(a) could i transfer my ppr
Click to expand...
NOting of course, you don't "tranfer" a PPR. It simply is or it isn't, unless of course you want to engineer an appearance of such for some tax minimisation scheme.

and consider this pair of statements:

Can we not be "separated" in the eyes of the law
Click to expand...

By the way , we are not splitting up
Click to expand...

Maybe you and I have different moral yardsticks.
 
From what I understand of the situation, the OP spends the majority of his time in Dublin renting while he works. In this case he could easily justify calling his new Dublin property his PPR if he is going to live there 4 or 5 days a week.

Obviously Revenue will have their views when deciding on something like this, but I certainly don't see anything dodgy in what is being discussed here?
 
ButtermilkJa said:
From what I understand of the situation, the OP spends the majority of his time in Dublin renting while he works. In this case he could easily justify calling his new Dublin property his PPR if he is going to live there 4 or 5 days a week.

Obviously Revenue will have their views when deciding on something like this, but I certainly don't see anything dodgy in what is being discussed here?
Click to expand...

I would suggest a cohabiting couple who are actively seeking a way in which they might own two properties, but:
  • not be subject to capital gains tax
  • be able to avail of tax breaks for rent rooms
  • potentially have beneficial tax credit position
is betrayed by their actions.

If he wants a pied a terre. Buy one, pay the stamp duty, pay tax on any subletting, pay any capital gains tax due on disposal, don't claim owner occupied mortgage interest relief.
 
I think it should be possible for each of you to have different PPR without separating. Why not? Lots of couples live apart and will have different PPR's. Tax implications would probably be as follows:

1. You would probably pay stamp duty on the new house, unless it is a new property of a certain size & price and you are occupying it as intended;
2. Your mortgage interest rates on your existing house will not go up, unless the rate rises normally;
3. You do not need to separate your ownership (i.e. gf taking one house and you taking the other), you can continue with jt ownership on existing and have jt ownership on the new property;
4. You probably paid stamp duty as an owner occupier on your existing property and may have had a preferential rate as a result. usually if you move out you will have a clawback of this tax, but the fact that one of the owners still lives there means there should be no clawback.

Whether or not a property is you PPR is a matter of fact. If you spend most of your time in one property (i.e. your Dublin property) then that is your PPR. If your gf spends most of her time in your other property, then that is her ppr. The Revenue will have no problem with this.
 
Camry said:
...a cohabiting couple who are actively seeking a way ...
Click to expand...
I don't see it like that. I see it as someone who chose to co-habit in a single PPR with their 'partner', but who now sees that this is having a negative impact on his way of life and wants to rectify it. If he spends the majority of time in one location why is he not entitled to buy a home there and call it his PPR?
 
Camry - I am probably as much averse to tax evasion as you are but I think you're jumping the gun here in assuming that the original poster is looking for advice on tax evasion.

As I said above I suspect that they really need professional advice.
 
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