do i lose my Interest relief on Apt if i rent it out?

[narky]

sorry i don't know if I have this in the right place. Myself and my husband are moving from our small apt and are renting it out. Our rent received will not reach cost of mortgage unfortunately and that's even before our interest relief is added on.

we are moving into a family home and so we do not own 2 properties. I was wondering do we lose the TRS or not. I have googled and looked this up and cannot find anything. I'm really worried about making a huge loss when it comes to the apartment. We bought at the peak and now i'm about to have a baby and the apartment doesn't suit. oh the joys of the recession.

hope somebody can answer my question.

thanks in advance

 

[Graham_07]

You can only claim the TRS on the mortgage if the apartment is your "principal private residence". If you move out from the apartment and rent it it then becomes an investment property and you would need to notify Revenue at TRS section that you are no longer entitled to TRS.

However if you rent it out then 75% of the interest ( only the interest not the total repayment) is allowable as a deduction against rental income provided you register the tenancy with the PRTB. Also allowable would be other costs, like insurance etc.

 

[narky]

thanks graham07. had a feeling alright. so i will be subbing the rent by 300euro now I will hardly have to pay any tax on this making such a loss?

It is proving hard for me to get my head around things with fuzzy baby brain due to lack of sleep and busy moving so pardon me if all these questions have already been answered.

 

[txirimiri]

Hi Narky, unfortunately Revenue does not care how much you have to sub the mortgage! We were in a similar position - we moved abroad and rented out our family home (only property that we own, we are renting abroad).

Despite subbing the rental income at one point by almost a grand a month to pay the mortgage, we still would have been liable for tax on the 'profit' we made by renting out our home but, as our mortage was relatively new and a giant part of the repayments were interest and as we did about 5 grand worth of repairs to the house the same month as the tenants moved in which we were able to claim against over a 4 year period, we ended up not owing anything.

The sum you need to focus on is the % of your repayments that are going in paying off the interest on your mortgage rather than the differential between your mortgage repayments overall and your incoming rent. Your yearly statement from the bank should tell you what proportion of your repayments last year were interest and what proportion was capital. If your mortgage was taken out recently, the chances are that you are paying a significant proportion in interest and therefore will be able to offset a significant proportion of your rental income.