First Time Property Let Query

Hi everyone,

I have a question relating to tax implications of letting. I own my own home but due to a change in employment I will now have to rent in another part of the country.

If I let my home is their any way of recouping some of the cost of renting elsewhere? I will be under a bit of pressure to cover the mortgage and pay rent at the same time. This may sound like a stupid question but any help would be greatly appreciated.

Thanks,

CC

This is unfortunate.
If you have TRS on your Home Loan you will loose that.
You will have to change your Insurance to a BTL policy which will cost more.
You must register your Tenant within a month of letting €90.
You will get 75% of the interest on your mortgage to put against your Rental Income.
You will have to pay the LPT.
Open a separate account for Rent and outgoings.
You will be allowed write off for repairs and renewals
You will be allowed 12.5% depreciation on furniture, white goods etc. Strictly speaking this is on the furniture and white goods supplied after the tenant moves in. You might get away with valuing the current furniture etc very reasonably and claiming the depreciation.
You will need to supply a small fire extinguisher.
You might google "minimum standards for rental accomodation".
You will not be able to write off any of the rental income to subsidise your payment of rent.
This is not as easy a business as some people might think.
Above all be very careful with Tenant selection. Try a tenancy for 5 months first and if everything is working out you can continue the Lease.
Good luck

Thanks for your detailed response Dermot.

Dermot said:

This is unfortunate.
If you have TRS on your Home Loan you will loose that.
.......

This is not as easy a business as some people might think.
Above all be very careful with Tenant selection. Try a tenancy for 5 months first and if everything is working out you can continue the Lease.
Good luck

Click to expand...

Absolutely agree with the last two points by Dermot.

If you rent out your home, do not expect to get it back in the same condition (even including fair wear and tera) as it was when rented first. Furthermore there are a lot of regulations as regards tenants' rights and landlord obligations, In the event that a tenant is in breach of his obligations, it could prove extremely costly - I would recommend that a landlord has sufficient cash in hand to cover at least 6-9 months rent to cover any mortage payments should a tenant get into rent arrears. It could easily take this amount of time to get a tenant out and little real likelyhood of getting all the arrears paid up.

If a landlord has a "decent" property, I would suggest starting the tenant on a Part 4 lease of, say, 3-5 months. This way, if thge tenant is problematic, the landlord may evict the tenant with 28 days notice and no reason required. Once the tenant has been in the property for 6 months, he acquires Part 4 rights which allows him to stay in the property for up to 4 years without a new lease and the landlord only option to evict is by using one of the 6 grounds as set out in the RTA 2004.

If both the property and the area are "good", although the tenant may vacate wit 28 days notice, he would be unlikely to do so.

Follow an "introductory Part 4 lease" with a fixed term lease before the tenant acquires Part 4 rights, with relative certainty that the tenant is reliable. Obviously, initial referencing checks should still be carried out as these are indispensible.

Another way would be to have a well worded break clause in a fixed term lease, which would give the option of terminating the fixed term by either party, say at the 3 month mark. However, a bad tenant could cause a lot of hassle during the 2nd and 3rd month. So, my preference would be start on a short Part 4 and then go for a one year fixed term.

Obviously, a landlord with a problematic property (dubious heating systems, white goods, mould in property, poor BER rating etc.) this 2 stage format would not be suitable as the tenant may vacaste with 28 days notice whereas with a Fixed term lease, the best the tenant could do is assign the lease..