Getting Married-Both own property

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bigdee77

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I know this has been covered in previous threads but I’m still at a loss.
I’m a owner occupier for the last 4 years & my girlfriend is also owner occupier for the last 3 years. We are getting married soon and we intend to live in my girlfriend’s house after marriage as PPR. We intend to rent my house out.
What do I have to do from here?
Am I correct in saying my home has to be declared as an investment property? What does this mean? What are the consequences if I don’t? Do I have to change my mortgage with the bank as an investor mortgage? My owner occupier mortgage is up for renewal shortly. I’ve heard there is no point changing it as I’ll only have to pay capital gains tax.
Secondly should I get an interest only mortgage for this investment property?
Thirdly –if I declare my house as investment will I lose my TRS?- or will this double on our new PPR.
Forthly -Am I correct in saying there will be no clawback on stamp duty now that the law has changed recently?
Fifthly- Anyone any idea how much tax roughly would have to be paid on an rental income of 1000 per month with a mortgage of roughly 240,000 Euro ?
 
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What does this mean?
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Register with the PRTB and declare your rental income to Revenue.

What are the consequences if I don’t?
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You would be engaging in tax evasion which is illegal.

Do I have to change my mortgage with the bank as an investor mortgage?
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Check to see if the terms and conditions of your loan offer require you to inform the bank on change of use. They're unlikely to change your mortgage anyway.

Do inform your property insurance company as occupation is very relevant to property insurance.

I’ve heard there is no point changing it as I’ll only have to pay capital gains tax.
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CGT applies when you sell the house. It has nothing to do with your mortgage.

Secondly should I get an interest only mortgage for this investment property?
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That depends on your circumstances - not a black and white issue.

Thirdly –if I declare my house as investment will I lose my TRS?- or will this double on our new PPR.
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You will lose your TRS but will be able to claim the interest against your rent.

Forthly -Am I correct in saying there will be no clawback on stamp duty now that the law has changed recently?
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Yes.

Fifthly- Anyone any idea how much tax roughly would have to be paid on an rental income of 1000 per month with a mortgage of roughly 240,000 Euro ?
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Deduct the monthly interest from your rent, along with any ongoing expenses including property insurance and life assurance. The balance is taxable as income.
 
Thanks LD ferguson.

So how is the capital gains tax worked out ? Should i get the property valuated before i rent it out ? Will cgt only be due from the date I rent it out?

Also will the TRS double for my girlfriend when we get married ?

Sorry I'm a total novice
 
CGT is calc only when you sell the property.

It is calc in proportion to the time you had it as an investment.

Example
Property bought may 2004 for 250K
Investment Property aug 2008
Sold say Feb 2012 for 400K

Time owned 7 years 9 mths (93 mths)
Time as PDH 4 years 3 months (51 mths)
Time as investment 3 years 6 months (42 mths)

Calc for CGT 150 * 42-12/93 = 48.39K

You are allowed deduct legal & auctioneers exps in buying and selling in calc the profit
You can also deduct any enhancements you made to the property but not normal wear and tear exps

Revenue allow 12 months to sell the property - hence the 12 in the calc above.

See here for the [broken link removed]
 
bigdee77 said:
Thanks asdfg- you've explained it very well.

Can anyone answer my question on TRS ??
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Liam did. Your TRS is gone. Just be careful about notifying your mortgage provider that the property is now an investment property. Many will disagree but I would not tell them.
 
But will my girlfriend's TRS increase because her status will change from single to married?? Why would you be cautious about telling mortgage provider?? My mortgage is due for renewal in next few weeks anyhow.
 
bigdee77 said:
But will my girlfriend's TRS increase because her status will change from single to married?? Why would you be cautious about telling mortgage provider?? My mortgage is due for renewal in next few weeks anyhow.
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Yes, you are both still 'first time buyers' in that it's the first 7 years of your first mortgage (the year the mortgage is taken out plus 6 subsequent years) Your collective ceiling will be €20,000 instead of €10,000 for you and €10,000 for her. I'm not sure what 'due for renewal' means but investment properties are considered higher risk. Higher risk usually means a higher charge, i.e. a higher interest rate or less generous loan percentage. Which is why personally I'd say nothing, but that is just my opinion.
 
It's very important you tell your house insurance people that it is a rented property - this means your premiums may go up or they may not even agree to cover you. Not all insurance companies do landlord insurance. The most important thing to do is register with the PRTB, if you don't then you can not offset the mortgage interest against tax. TRS is of less benefit to you than offsetting the interest against tax. If you tell your bank that it's now an investment property then they may decide to increase your mortgage rate - that's what John Rambo is telling you.
 
Because I am a first time buyer 4 years ago and my girlfriend is first time buyer 3 years ago- how many years will we have a collective ceiling of Euro 20,000 in our PPR ?
What I meant by my mortgage is due for renewal is that my fixed rate of one year is up shortly and i have the option of another rate,tracker, etc
My management company include insurance in their fee- will this be adequate?
 
bigdee77 said:
Because I am a first time buyer 4 years ago and my girlfriend is first time buyer 3 years ago- how many years will we have a collective ceiling of Euro 20,000 in our PPR ?
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Presumably 3 and then 1 where you claim non FTB relief while she continues to claim FTB relief - thereafter you both claim non FTB relief?
 
bigdee77 said:
Because I am a first time buyer 4 years ago and my girlfriend is first time buyer 3 years ago- how many years will we have a collective ceiling of Euro 20,000 in our PPR ?
What I meant by my mortgage is due for renewal is that my fixed rate of one year is up shortly and i have the option of another rate,tracker, etc
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On the TRS form (available at www.revenue.ie) you enter your details individually, when you BOTH took out your first mortgages etc. So logically she'll get one extra year at the ten grand level, while you'll be at the lower level (think it's 3 grand). On the mortgage, how competitive is your lender? The point is investment mortgages, especially now, are generally more expensive and you can usually borrow much less (usually around 80%) Again, not everyone would advocate this but I would not inform the bank. (and I've been advised this by a friend who works with my lender)
 
bigdee77 said:
My current lender is BOI - was thinking of changing to NIB LTV mortgage.
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Switch to the LTV mortgage while you're still living in the property as NIB don't offer this product for investment properties, as far as I know. The NIB LTV mortgage is the most competitive tracker variable rate available for mortgage up to 75% of the property value.
 
Actually -i'll probably change my PPR to NIB LTV after marriage, I think NIB do Buy to let mortgages that I could also change my curent home to in the future. Not sure how long the term will be on that though?
 
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