New rental advise

C

cmyk

Guest
Hello, long time lurker but never posted until now. Some advice needed please. I own a 2bed apartment which I have lived in for the last 3 years.

My girlfriend and I would like to live closer to where we work as commuting is crazy from my place. I have decided on renting my apartment and renting somewhere closer to our jobs.

I have 2 questions really. I realise I will have to register as a landlord in order to do this. I will however be making a loss on the rental, how does this work with regard to paying tax as it will not be an investment and I will have to make up a shortfall in the mortgage payments as well as rent on the other property, or am I being naive there?

2nd question is, should I use an agent, is it worth the money, and are some more reputable in terms of better tenants than others? Thanks in advance.
 
Open to be corrected but here is my read of your situation,

All rent will be subjected to the income levy. There may also be a portion of the health levy applied.

You can only expense 75% of the interest part of the repayment.

You will have to pay the 200 euro "property tax"

As soon as you rent it , it becomes an investment.

If i were you, i would seriously reconsider doing this in the present climate. God knows what will be in the next budget.

Do it youself is the probably the best option as its nearly free (providing you have the time).
 
ditto what other poster has said ,also you will need to inform your insurance co and inform them that its now rented out or soon to be and also you dont say if you were a first time buyer re stamp duty claw back
 
Thanks folks, really have to sit down and do some figures. I was a first time buyer. I knew I'd be losing a good chunk of my interest mortgage relief.

In my naivety I though I might be able to offset some of the tax as you can if you make a loss in any other business.
 
cmyk said:
I realise I will have to register as a landlord in order to do this..
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You will do this went you get tenants.
When you register with the PRTB.€70

You will have to notify bank of the change as they should stop your Tax relief at Source(TRS) You will get more tax relief on interest usually with investment property but it is back dated rather than put into your account as in residence. Warning I'm not up to date on latest budget implications.

You must also change your house insurance and notify them that it will be rented. I got a good deal on 123.ie. My own insurers tried to crucify me.

cmyk said:
I will however be making a loss on the rental, how does this work with regard to paying tax as it will not be an investment and I will have to make up a shortfall in the mortgage payments as well as rent on the other property, or am I being naive there?..
Click to expand...
A negative cash flow won't necessarily translate into a loss from the revenue point of view. As in the capital repayment portion is not deductible from your income. (and now 25% of you interest payments)
I find it hard to believe that the income levy will be applied to gross income from rental rather than "profit". More reason to tear my hair out.

I would do all the sums.
The cost of commuting etc
The cost of renting and work out whether its viable for you.
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I made a paper profit of €1250 on my house last year...not including thousands of capital repayments.
cmyk said:
2nd question is, should I use an agent, is it worth the money, and are some more reputable in terms of better tenants than others? Thanks in advance.
Click to expand...

its a big cost using a agent and IMHO not worth it...especially when "profit" margins are so tight...its really a months rent.
So DIY thru daft.ie is pretty good.
You will need to get a copy of a lease pm me and I can send you something.

Good luck
 
You might consider renting out just a room in your apartment and keeping it as your principal private residence (no extra insurance cost, up to 7k per annum tax free (is that still the same??), no issue with stamp duty clawback or capital gains issues do to property becoming an investment, no need to tell your mortgage provider). Might be an option for you if you found a tenant who went 'home' at the weekends and you would have the full enjoyment of the place at weekends too. Just a thought.
 
Mommah said:
You will get more tax relief on interest usually with investment property but it is back dated rather than put into your account as in residence.
Click to expand...

Thanks for the advise Mommah, not sure exactly what you mean by the above, but I'll look into that in more detail now.

In terms of agents, my only hope there was I don't particularly want to be getting phonecalls every ten minutes from lodgers, and would have hoped they might have a better 'pool' of potential lodgers, having read some horror stories here and elsewhere. I realise though that good tenants are the holy grail.
 
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