rental return query on Mortgage interest

[chanceanarm]

I have been letting a house for some years now and always do my own tax returns. ( form 12 ). For the year of 2005 that I have been letting this house, I stand to make 4000 euro profit, after allowable exspenses etc.

Last year I purchased a second property which I am also letting. Cost price 260K. The Interest on this is roughly 8,000 Euro for the year of 2005.
The cost of the second house on my rental return being around 10k, ( Adding on the expenses, repairs etc. )

Here in lies my question !!

From what I can gather on Revenue documentation is that when I am returning my Schedule of Rental income for 2005, the 10,000 cost of House B is taken from the Profit on House A, Leaving me with no Profit rent to declare to revnue.

Is this correct ? Is there any cap on the Mortgage interest that can be deducted on Rental properties ??

Thanks for any replies,
Dave

 

[DonKing]

I presume that "the cost of the second house on my rental return being 10k".
is a rental loss on the property?

You can offset rental loss's on one investment property against the rental profits of another. However you can only offset Irish properties against Irish properties. Foreign properties are treated separately but you can offset one foreign property rental profit against another foreign property loss.

As far as I am informed, revenue like to see the rental profit/loss calculation for each property individually and then you can add them all up (loss's being negative) to give you your total rental profit. (again you would have a separate rental profit for foreign property)

Rental Income from properties in Ireland is classed by revenue as Schedule D case V income whereas foreign property Income is classed as Schedule D Case III income.