Rental income V mortgage question

T

Tillerman

Guest
Hi all

I have a property which is currently rented for €750 p/m. My mortgage is €1000 p/m. I am wondering if I can in some way claim this €250 as a loss when doing my returns and if so where is this €250 deducted from on the tax form.

Thanks
 
Is the €1,000 interest only or interest plus capital?

You can only get a deduction for 75% of the interest portion of the mortgage repayment (assuming that it's a residential property and that you're PRTB compliant).

Any rental loss is simply carried forward for offset against any future rental profits.
 
Thanks for reply

That €1000 would be interest plus capital. I understand that only 75% of interest paid on this mortgage can be reclaimed. I was just hoping that I may in some way may be able to reclaim the €250 loss per month. I am paying €1000 per month on the mortgage but only recieving €750 in rent. Can this sum be offset against the total rental income at end of year returns?
 
No you can't. It's not considered a loss as it's you paying off a loan at the end of which you will own the property outright. All rent is considered taxable (minus allowable deductions) regardless of the mortgage.
 
Tillerman said:
Thanks for reply

That €1000 would be interest plus capital. I understand that only 75% of interest paid on this mortgage can be reclaimed. I was just hoping that I may in some way may be able to reclaim the €250 loss per month. I am paying €1000 per month on the mortgage but only recieving €750 in rent. Can this sum be offset against the total rental income at end of year returns?
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If that's the case, then you're likely to be making a profit for tax purposes based solely on the rental income less the mortgage repayments (based on the €750 monthly income less 75% of an amount that must be less than €1,000).

Presumably you've other expenses to offset against the rental income?

For example:

- PRTB registration fee
- Capital allowances on furniture/appliances (tax depreciation over 8 years)
- Accountancy fee for preparation of rental account/tax return
- Service charge
- Repairs and maintenance
- Letting fees
- Management fees
- Advertising
- Insurance
 
Yeah I am claiming all other expenses- just wanted to make sure that I wasn't missing anything but you have answered my question- thanks for the replies- v helpful.
 
Not being smart but the original question seems frighteningly naive from somebody who is already engaged in the rental property business. As such I would encourage the original poster to get independent, professional advice on the financial/tax aspects of renting a property.
 
ClubMan said:
Not being smart but the original question seems frighteningly naive from somebody who is already engaged in the rental property business. As such I would encourage the original poster to get independent, professional advice on the financial/tax aspects of renting a property.
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Clubman- you're are correct- you are not being smart but you are trying to be. These forums are suppose to be informative and constructive so if you can't be that, then please don't bother.
 
Tillerman said:
Clubman- you're are correct- you are not being smart but you are trying to be. These forums are suppose to be informative and constructive so if you can't be that, then please don't bother.
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Clubman's observation is a fair one in my view.

If you're already actively involved in the property rental scene but don't understand the fundamentals of it, you could walk yourself into a lot of trouble with Revenue.

Pay an expert to assist you. It shouldn't cost the Earth and it'll probably be self financing as they're likely to save you money with their observations. Plus it should be deductible, probably halving the cost of the advice to you.
 
Clubman's post was 100% correct and his advice to get professional advice was constructive. Your response, especially for a new user, was rather rude.
 
Tillerman said:
Clubman- you're are correct- you are not being smart but you are trying to be. These forums are suppose to be informative and constructive so if you can't be that, then please don't bother.
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Have a look at his post count and have a look at your post count.

Have a look at his posting history, and have a look at your posting history - particularly the two where you clearly indicate that you don't understand the fundamentals of your tax position. Even after having it explained, you still appeared uncomfortable with the distinction between 75% of the interest, and 100% of the mortgage repayment (which includes all of your interest).

The logical conclusion of which is that you need professional advice OP.

Clubman's use of the phrase frighteningly naive is perhaps a tad dramatic but not inaccurate, given the potential serious financial consequences if you don't do things right.

So I think you need to pull your head back in a bit and appreciate that constructive advice can be critical without being rude, and that's the case here.
 
Sorry if my earlier comment upset anybody but apart from the "dramatic" phrasing I stand by the commnents/advice.
 
I agree with the others I'm afraid OP, Clubman was being helpful, despite his choice of words. However you are not the first person on here to ask that question, others have even assumed they don't have to pay tax if the rent is less than their mortgage payments.

Clubman is right in his suggestion though. The penalties around not paying letting related taxes, fees and levies are punitive compared to other taxes. Take non payment of NPPR, the penalty charged is €20 per month, which means if you are a year late, you owe €440 instead of €200, which is a massive penalty. This is one of the things new landlords aren't automatically aware of and can be hugely expensive lessons to learn.

If you were to use an accountant, their fees are also tax deductible so it's well worth considering for your first year's tax returns at least.
 
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