Rent our house to rent a bigger one?

Yvonne 062

Registered User
Messages
41
Hello everyone,

Hoping someone can help. We have been trying in vain to sell our house in Galway for a while now (not actively advertising it at the moment as there is just no point). We have two children with another one on the way Please God in May. Our current house is a 3 bed semi and we will definitely find it tight for space come May. Just wondering how things work if we try to rent our house (should be easy enough to do as its a very rentable area and not a huge amount on Daft at the moment), and rent a bigger house close by? Is this a viable option financially? Our mortgage repayment is about €1k a month and we should get about €800 rent for our own house. We would be happy to pay the bit extra plus rent of a bigger house for the extra space. But I'm not sure about the tax implications - if you have to pay tax on your rental income, can it be netted against the rent you pay or what is the story there?
Sorry but a bit clueless about these things!
Thanks!
 

LDFerguson

Frequent Poster
Messages
4,039
If you rent out your current home, the rent is assessable for tax. You can't write off rent you're paying but you can write off other things including mortgage interest, life assurance, property insurance, repairs etc.

As a separate transaction, you can claim Rent Relief in respect of the rent you pay.

You also may be assessable for Capital Gains Tax if you subsequently sell the property for a profit over what you paid for it. The CGT bill will be reduced to take into account inflation and also proportionately reduced for the amount of time it was your own residence. (For example, if you lived in it for one year and rented it for three years, you'd only have to pay 25% the normal CGT rate.)

Do searches on www.revenue.ie and you'll find leaflets on taxation of rental income and Capital Gains Tax.
 

Bronte

Frequent Poster
Messages
13,241
But I'm not sure about the tax implications - if you have to pay tax on your rental income, can it be netted against the rent you pay or what is the story there?
You must not think of it like this. it's two separate transactions. If you rent you treat it as a business, do the figures up on this. Then you can see if it makes sense to rent a bigger house.
 

Yvonne 062

Registered User
Messages
41
Hi Bronte,

Thanks alot for the helpful reply. I did some rough calculations and I don't think its going to be financially viable to move. It may just be better to reduce the asking price on our own house a bit more next month when we put it back on the market and then rent if and when we sell it.

Thanks again
 
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