Renting family home

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R196

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Hi All,

i am considering renting our current home and renting another property myself in a different location.

i am currently on a tracker mortgage - my questions are:

1. If accepting rent allowance do I automatically have to declare this by completing a self assessment form at end of year?
2. Do I have to pay tax if mortgage repayments outway the rental income?
3. Do I have to register with PRTB?
4. Will accepting rent allowance in anyway effect my receipt of mortgage interest relief ?

appreciate your help.

thanks
 
thank you - that post does assist.

the only question that remains unanswered is

Will accepting rent allowance in anyway effect my receipt of mortgage interest relief ?

i.e will revenue pick up on the fact that i have a submitted a tax form on a rented property but also be claiming mortgage interest relief on same property?
 
R196 said:
thank you - that post does assist.

the only question that remains unanswered is

Will accepting rent allowance in anyway effect my receipt of mortgage interest relief ?

i.e will revenue pick up on the fact that i have a submitted a tax form on a rented property but also be claiming mortgage interest relief on same property?
Click to expand...

Presumably you are talking about tax relief at source on your mortgage interest? You are no longer entitled to TRS once you rent out the property - instead you are allowed to write off 75% of the mortgage interest as an expense to reduce your profit from the letting.

To answer your question, no, rent allowance won't affect your receipt of mortgage interest relief, because the fact that you've rented out the property already disqualified you.

And yes, Revenue will pick up on it if you continue to claim TRS on a rented property - but it might take them a couple of years to come after you, by which time you would have created a fine mess for yourself because you'll then owe interest and penalties on top of the money back.
 
damnit Ben, you beat me to it!

R196, as Mandlebrot says you will not be entitled to TRS once you are no longer living in the property, however you can deduct 75% of interest paid when calculating the tax due so you actually have a far more valuable deduction.
 
If you do not advise your mortgage company that you are renting out the house, the lease that you create - whether written or verbal - may be invalid. Most mortgages, I believe, have a clause prohibiting the letting of the property without their written consent.

However, you have only looked briefly at the tax situation. You must also consider the landlord rights and obligations as well as the tenant's rights and obligations.

Renting out your property is NOT (note: "not" in capitals, bold and underlined) as easy an option as it may seem at first. It will be considered as a business and like all business owners you will be expected to know ALL the laws relating to it. If there is a problem with the tenants (and I hate to say it, but rent allowance tenants are mostly considered as bad tenants, whether rightly or wrongly) and you do the wrong thing, it could cost you 2k, 4k, 6k 10k or more in damages awarded against you.

Just go to the PRTB website and read some of the cases adjudicated by them whether the claim was brought by the landlord or the tenant.

What will you do if the tenant fails to pay the rent?
Can you afford to pay the mortgage and your rent (of the property you will be living in) if the tenant does not pay.

So you evict the tenant for rent arrears - but the tenant over-holds for 2, 3, 6 months before the PRTB make a decision. The decision goes your way but the tenant doesn't have any money to pay the arrears. What will you do?

You are in the middle of a fixed term agreement and suddenly you need to move back to your property (whether for financial, work or family reasons). You may not do so. The law is on the side of the tenant. A tenant can get out of a fixed term agreement by assigning the lease to someone else. But there is no way a landlord can regain possession of their property during a fixed term lease.

After 6 months in occupation, a tenant has the right to remain in the property for a total of 4 years without signing a new lease.

Do not expect to get your property and furniture back in the same condition as it was when you rented it out - a house owner's "normal wear and tear" is a lot less than a tenant's normal wear and tear.

Probably mentioned elsewhere (as I haven't read the whole thread). you will also require landlord's insurance, PRTB registration, possibly pay PRSI on the rental income, as a first time landlord you may have to employ an agent who (hopefully) knows the business.
 
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