Question regarding rent income and PAYE income

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world201812

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Couple earn €100,000 pre tax.

Have mortgage of €500 per month. They rent out the property they own for €2,500, and then rent another property for €2,000, to live in.

How are they taxed? How does it work?

How much of €2,500 of rental income do they get into the hand? 50%? So actual cost of renting out other property is €800?
 
Hello,

The 2,500 is taxed at 50+% ( 40 plus 4 plus 8)

If they have expenses - not the 2k of their rental .. nor the capital mortgage payment.. rather the interest on the loan may be deductible..

They would have to declare the 2,500 to the tax man on form 11 and pay tax..

So the cost of renting out:

Income 2,500

Less 2,000 rent of other property
Less 500 mortgage
Less say 1,250 tax

Net they are down 1,250 per my estimation..
 
As far as I am aware you have to register the property with the PRTB to claim mortgage interest relief which is 75% of interest - you may claim 100% if the property is let to HAP tenants. Another consideration would be CGT if you were to sell the family home in the future - usually there is no tax on the sale of your principal private residence but if it has been rented you may only get partial relief.
 
Thank you both Feemar5 and Mary55555 for your quick response, much appreciated.
If the property had one owner resident and the second room rented out under the rent a room scheme, with income of 14,000 per annum, how would this impact on the tax situation as listed in your calculations Mary5555?
It would be income of 1166 per month, as opposed to 2,500?
 
Hello

14,000 per annum is 1,167 per month..

Income 1,167
Less out goings
Rent 2,000
Mortgage 500
No tax

Net position cost 1,133

However it seems questionable this approach.. is there a logic?? I’m not sure without the background if Revenue won’t find this at the very least odd!!

What is the real question/ context..
 
Thanks Mary 55555, did a bit of digging on rent a room scheme.
My bad. Initial calculation as at top of thread will be way to go/what we will be doing.
The tax of 50% plus is outrageous, but thanks for insight.
 
world201812 said:
If the property had one owner resident and the second room rented out under the rent a room scheme, with income of 14,000 per annum, how would this impact on the tax situation
Click to expand...

Just looking for trouble there pretending one of you were living there.
 
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