WaterSprite
Registered User
- Messages
- 1,309
It certainly is not great! Let's not despair just yet - I'll call the other Revenue number and refer to that line in IT70 and get specific info and report back tomorrow.
Sprite
Sprite
Last edited:
Rent apt or keep trying to sell
- Thread starter Thrifty1
- Start date
I spoke to revenue on this years ago.
They told me the following.
If you buy a PPR and then, after a time, rent it out you can claim any relief on the interest paid on the mortgage.
What you cannot claim for is interest on any further loans on the property, just the original mortgage.
In other words, you cannot remortgage and expect revenue to pick up the interest on your new debt
They told me the following.
If you buy a PPR and then, after a time, rent it out you can claim any relief on the interest paid on the mortgage.
What you cannot claim for is interest on any further loans on the property, just the original mortgage.
In other words, you cannot remortgage and expect revenue to pick up the interest on your new debt
Correct - unless the topups are use to renovate the property.
Surely that is referring to owner occupier mortgage interest relief. If you convert a PPR to a rental property then the interest on the amount of any loan(s) remaining outstanding that was (were) used to purchase or renovate the property can be offset against rental income. You must be registered with the PRTB first in order to be able to do this.
If you don't believe me then get professional advice and they will tell you the same thing. Unless the rules have changed recently.
WaterSprite
Registered User
- Messages
- 1,309
Ok - I called North City Income Tax and have to email in my query. Will do that now and report back again.
clubman, yes, the link I posted dates from 1998 but there's no new information on revenue.ie to say that the rules have changed. The 1998 link deals squarely with the issue and applies to where you've moved house but then rent out the property that was once your PPR. The most recent information is at: [broken link removed] which merely says:
"Allowable Deductions A person may claim a deduction from gross rent for legitimate property related expenses as follows:...
Interest - Relief is due for interest paid on loans to purchase, improve or repair a residential premises (some exceptions)."
So my question to them will be "what exceptions"?
Will report back again - unfort it may take a couple of days for them to get back to me. I'm also thinking that the rules *must* have changed, but really want Revenue confirmation that this is the case.
Sprite
clubman, yes, the link I posted dates from 1998 but there's no new information on revenue.ie to say that the rules have changed. The 1998 link deals squarely with the issue and applies to where you've moved house but then rent out the property that was once your PPR. The most recent information is at: [broken link removed] which merely says:
"Allowable Deductions A person may claim a deduction from gross rent for legitimate property related expenses as follows:...
Interest - Relief is due for interest paid on loans to purchase, improve or repair a residential premises (some exceptions)."
So my question to them will be "what exceptions"?
Will report back again - unfort it may take a couple of days for them to get back to me. I'm also thinking that the rules *must* have changed, but really want Revenue confirmation that this is the case.
Sprite
If you re-mortgage any propery to fund or part fund the purchase of an investment property, the interest would be allowable as an expense in purchasing the new property-provided you register with PRTB of course. If a loan is taken out for another purpose, -e.g. a car, boat, holiday ,debt consolidation, or whatever, it is not a qualifying expense.
WaterSprite
Registered User
- Messages
- 1,309
No word back yet from Revenue I'm afraid - I'll post as soon as they get back to me.
Sprite
Sprite
Shakespeare
Registered User
- Messages
- 124
Hi all
I'm pretty sure that as you lose PPR status and your property becomes an investment property, thus you're liable for CGT, stamp duty clawbacks etc because suddenly it is deemed to be an investment property, then you are entitled NOT to mortgage interest relief (which some people still tend to continue to call it) but to claim the interest on the original mortgage, against your rental income.
In fairness, it's either an investment property or not, even the Revenue don't try to have it both ways!!
What you cannot do is raise further finance on that investment property, use it to extend, renovate, your new PPR and then claim the interest on the new borrowings against the rental income.
BTW, for what it's worth, I wouldn't go to court on the basis of what you're told by anyone on the phone working for the Revenue. They are not necessarily all well informed and up to date.
2 cases in point -
1. A few years ago when lots of tax reliefs were standard rated, I submitted a MED 1 form and was only refunded 20%, when I phoned up, I was told over and over that "all reliefs are now standard rated" - FALSE, Medical expenses are still claimed at the marginal rate of tax (it even says so on the form)
2. I recently submitted a 2007 tax return and received 5 incorrect assessments.
Given that I was claiming reliefs, you can imagine my surprise when the first assessment suggested I owed them Eur22k!!
It took me 3 months of revised assessments to get one approximating what I knew to be correct (still a few hundred euro off but that's for another day)
Shakespeare
I'm pretty sure that as you lose PPR status and your property becomes an investment property, thus you're liable for CGT, stamp duty clawbacks etc because suddenly it is deemed to be an investment property, then you are entitled NOT to mortgage interest relief (which some people still tend to continue to call it) but to claim the interest on the original mortgage, against your rental income.
In fairness, it's either an investment property or not, even the Revenue don't try to have it both ways!!
What you cannot do is raise further finance on that investment property, use it to extend, renovate, your new PPR and then claim the interest on the new borrowings against the rental income.
BTW, for what it's worth, I wouldn't go to court on the basis of what you're told by anyone on the phone working for the Revenue. They are not necessarily all well informed and up to date.
2 cases in point -
1. A few years ago when lots of tax reliefs were standard rated, I submitted a MED 1 form and was only refunded 20%, when I phoned up, I was told over and over that "all reliefs are now standard rated" - FALSE, Medical expenses are still claimed at the marginal rate of tax (it even says so on the form)
2. I recently submitted a 2007 tax return and received 5 incorrect assessments.
Given that I was claiming reliefs, you can imagine my surprise when the first assessment suggested I owed them Eur22k!!
It took me 3 months of revised assessments to get one approximating what I knew to be correct (still a few hundred euro off but that's for another day)
Shakespeare
I know im liable for CGT when i sell (but would be regardless of whether i rent or not as it ceased to be my PPR last month anyway).
Re stamp duty clawback can anyone confirm that as we own the apt almost 4 years we are not liable for this (website is very unclear i thought it was after 5 years but i know the law changed to 2 years
A clawback arises if rent is obtained from the letting of the house or apartment for a period of 5 years (2 years where the property is rented out on or after 5th December 2007) from the date of the conveyance or transfer, other than under the rent-a-room scheme (It should be noted that the stamp duty legislation does not contain any limit as to the amount of rent which can be recieved by a person in respect of furnished accomodation in part of the house). The clawback amounts to the difference between the higher stamp duty rates and the duty paid and it becomes payable on the date of that rent is first received from the property.
The claw-back period for instruments dated on or after 5th December 2007 in relation to the condition prohibiting the letting of the entire property, is being reduced for all three reliefs from 5 to 2 years for instruments executed on or after 5 December 2007.
For instruments executed before 5 December 2007, to the extent that a dwelling house or apartment is rented out on or after 5 December 2007, it will not involve a clawback of the relief where this occurs in the third, fourth or fifth year of ownership.
Apt purchased Sept 2004 so we are in the 4th year of ownership.
Re stamp duty clawback can anyone confirm that as we own the apt almost 4 years we are not liable for this (website is very unclear i thought it was after 5 years but i know the law changed to 2 years
A clawback arises if rent is obtained from the letting of the house or apartment for a period of 5 years (2 years where the property is rented out on or after 5th December 2007) from the date of the conveyance or transfer, other than under the rent-a-room scheme (It should be noted that the stamp duty legislation does not contain any limit as to the amount of rent which can be recieved by a person in respect of furnished accomodation in part of the house). The clawback amounts to the difference between the higher stamp duty rates and the duty paid and it becomes payable on the date of that rent is first received from the property.
The claw-back period for instruments dated on or after 5th December 2007 in relation to the condition prohibiting the letting of the entire property, is being reduced for all three reliefs from 5 to 2 years for instruments executed on or after 5 December 2007.
For instruments executed before 5 December 2007, to the extent that a dwelling house or apartment is rented out on or after 5 December 2007, it will not involve a clawback of the relief where this occurs in the third, fourth or fifth year of ownership.
Apt purchased Sept 2004 so we are in the 4th year of ownership.
If you rented it out before 5th December 2007 then you are liable. Otherwise you are not.
WaterSprite
Registered User
- Messages
- 1,309
Alrightly then - Revenue got back to me. With allowances for the usual caveats that others have mentioned (not relying on Revenue and all that). Here's what they said:
Dear [Watersprite],
I refer to your query below. The Mortgage Interest paid can be offset against the rental income received. Exeptions would be interest paid on loans acquired for the purchase of fixtures & fittings.
Yours Sincerely
North City PAYE
Dear [Watersprite],
I refer to your query below. The Mortgage Interest paid can be offset against the rental income received. Exeptions would be interest paid on loans acquired for the purchase of fixtures & fittings.
Yours Sincerely
North City PAYE