PPR if I leave to study abroad?

M

murphaph

Registered User
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1,136
Hi all,
Quick question. If I leave to do my masters abroad (1-2 years), can I hold on to my PPR status for TRS purposes (nothing to do with stamp duty) or do I have to inform revenue and lose it no matter what?

On a related note, if I have no income abroad, do I still have to pay tax on the income (c. €500 after interest p.m.) from renting the house out here?

Don't want to do anything dodgy-just want to know if I can avoid tax as I'll be living like a bloody pauper student again if I do take this opportunity.

Country is Germany btw.

Thanks for your thoughts folks.
 
Sorry, just a bump-I know somebody on here will know exactly what I'm entitled or not entitled to. Cheers guys.
 
Sorry but this is a tricky one. Might be worthwhile contacting the Revenue people!
 
Unregistered said:
Sorry, just a bump-I know somebody on here will know exactly what I'm entitled or not entitled to. Cheers guys.
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Please note the relating to "bumping" threads back to the top.
 
No you would not be entitled to mortgage interest relief. (TRS)
But the mortgage interst would be allowable as a deduction against the rental income. This together will your allowance should ensure you have no tax to pay.
 
Unregistered said:
No you would not be entitled to mortgage interest relief. (TRS)
But the mortgage interst would be allowable as a deduction against the rental income. This together will your allowance should ensure you have no tax to pay.
Click to expand...
Hi there, sorry about the bump Clubman-that's te first time I've done that, honest!

Unreg, are you sure I'd have no tax libility? I'd have rental income of c.€1000 pm and mortgage interest of c.€400 pm. I'd assumed I've got €600 of taxable income there, so I was really wondering because I'd have no income in Germany (poor student!) would I be exempt on those grounds? I think Marie is right......gonna have to call revenue about this!
 
Even if you can retain your owner occupier status while abroad (and this has not been established) then if you exceed the €7,620 p.a. rental income allowed under the owner occupier then the property will automatically be classed an investment property which will have implications for CGT and possible (if rented out within five years of the original purchased as an owner occupier) - and rental income will be too. Only owner occupiers benefit from [broken link removed] while investors can offset mortgage interest against rental income as one allowable cost. Best to get independent, professional advice on this as the situation is not totally clear.
 
Cheers Clubman, Say (as seems likely) the property will be deemed investment by revenue (given I hope to turn over 10-12k pa), if I moved back in does it automatically revert back to PPR status and I'm only liable for CGT on the gain in the period I was away? I intend coming back but I may not, in which case I don't mind if the property stays investment cos I'll be doing well for myself anyway! Luckily stamp-duty claw back doesn't apply here.
 
When a property that was sometimes a PPR and sometimes an investment property is sold then the portion of the gain assessable for CGT is calculated on a pro rata basis. For example, say you own a property for 10 years and have lived in it for the first 5 years and then rented it out for the second 5 years then (as far as I know) 4/10ths of any gain arising from the sale is assessable for CGT (as far as I know the 12 months after moving out is also exempt from CGT hence 4/10ths rather than 5/10ths). Note the actual timing of gains (e.g. the capital gain in the first 5 years and the capital gain in the second 5 years) is irrelevant and the amount assessable for CGT is calculated on a proportional/pro rata basis. Hope that makes sense!
 
Crystal clear explanation Clubman. Cheers. This may be a stupid question, but who in revenue should I call? Any particular dept?
 
If it was me I'd start by calling the tax office on my statement of tax credits. If they can't deal with the query then I'm sure that they can direct it appropriately.
 
The property will become PPR again if you come back and live there. You'd only be liable for CGT for the time that it's rented out. For example if, when you sell, it's been an investment property for two years and owner occupied for six years, you'll be liable for CGT to be paid on one third of the increase in value.

Just in relation to one point made by Clubman: In relation to exceeding the 7,620 tax free available per year under the 'Rent A Room Scheme', is it true that a property automatically becomes an investment property when this happens? Is it not still technically owner occupied but whatever amount earned above 7.620 is liable for income tax? Thanks to whoever can clarify this.
 
budapest said:
Just in relation to one point made by Clubman: In relation to exceeding the 7,620 tax free available per year under the 'Rent A Room Scheme', is it true that a property automatically becomes an investment property when this happens? Is it not still technically owner occupied but whatever amount earned above 7.620 is liable for income tax?
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If an owner occupied property is generating €7,620 or less in rental income then the owner occupier can avail of the rent a room scheme and the rental income generated is tax free and there is no CGT (or stamp duty clawback where applicable) impact. If the €7,620 limit is exceeded then all of the rental income (and not just the excess over the limit) is assessable for rental income tax and CGT (and stamp duty clawback where applicable) becomes an issue. Effectively the property becomes an investment property even of the owner continues to live there.
 
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