Moving abroad, rent or sell ...

Hopefully someone can advise me on the following:

My wife and I bought a house less than a year ago (<125 sqm and <300K) and now intend to move overseas despite having initially planned to live in it indefinitely and furnished it accordingly ...

I plan to rent it out but don't want it to be seen as an investment as we could return in a couple of years, I know there's a rent relief scheme allowing income of up to 6000 per year which means I could rent it for up to that amount but this falls way short of the 9000 I would expect in rental income if I was renting the whole house.

Will there be any SD clawback if I decide to rent given it's size, cost and the fact that I am a first time buyer?

How would either scenario affect my mortgage interest tax relief, obligation to register with PRTB, tax treatment of rental income etc.

I know there are lots of issues but any help would be great.

Cheers...

neopaddy said:

I know there's a rent relief scheme allowing income of up to 6000 per year which means I could rent it for up to that amount but this falls way short of the 9000 I would expect in rental income if I was renting the whole house.

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The rent a room scheme only applies to owner occupiers and you probably cease to qualify if you go abroad for an extended period of time. You need to get professional advice on this and how any extended trip abroad affects your owner occupier/PPR status.

Will there be any SD clawback if I decide to rent given it's size, cost and the fact that I am a first time buyer?

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Yes - most likely 5% assuming that the original purchase price was between €254K and €317.5K.

How would either scenario affect my mortgage interest tax relief, obligation to register with PRTB, tax treatment of rental income etc.

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See here.

cheers for the snappy reply ... the thing is that my domicile would remain as Ireland as my period abroad will be based on 1 year contracts and I will be returning home every year, so I'm hoping to view it as sort of an extended holiday/business trip.

I'll get in touch with a financial advisor though....

thanks again,

There is a lot of opinion and some facts in this thread that may be of interest.

neopaddy said:

cheers for the snappy reply ... the thing is that my domicile would remain as Ireland as my period abroad will be based on 1 year contracts and I will be returning home every year, so I'm hoping to view it as sort of an extended holiday/business trip.

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Domicile and owner occupier status may not be the same thing - you need to get professional advice on if/how your OO/PPR status might be affected by moving abroad. If you can retain your OO/PPR status while abroad things become a lot simpler but I wonder if this will be possible here.

Thanks for the feedback guys, it would appear that there's no way around the CB other than not renting the house for the remaining 4 years or taking the chance I won't be caught.

I assume after 5 years there is no SD clawback and you are then just required to pay interest on any rental income + CGT on any future sale, is this correct???

It would also be interesting to know what the definition of an owner occupier is ? Do you have to spend over 3months / 6 months of the year there and how can it this be proved either way?

neopaddy said:

I assume after 5 years there is no SD clawback

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Correct.

and you are then just required to pay interest on any rental income

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I presume you mean income tax? On rental income less any allowable expenses.

+ CGT on any future sale, is this correct???

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On some portion of any eventual resale gain - yes.

It would also be interesting to know what the definition of an owner occupier is ? Do you have to spend over 3months / 6 months of the year there and how can it this be proved either way?

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Have seen that asked several times here but have never seen an authoritative rule based answer.

One other thing, regarding mortgage interest relief.

How is it calculated? If I was to go abroad and not rent out my house would I still be getting this relief?

Thanks ...

This is covered in the original links that I posted.

It is owner occupier mortgage interest relief so if you are not an owner occupier you don't qualify for it and must not claim it (i.e. must notify Revenue of your change in circumstances). If you are an investor then 100% of mortgage interest on any loans used to purchase/renovate the rental property can be set against rental income.