Renting out apartment if moving to N. Ire

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moondance

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I bought a 1 bed apt last Oct (07), will possibly be renting it out next Sept (09) as I'm considering going back to full time education in Belfast. How will this affect me? The rental income won't cover my mortgage (even if I go interest only) so I'll have to make up the shortfall and pay management fees as well as renting student accommodation in Belfast. How will all this work if I'm living in Belfast? Will I have to pay any tax or can I claim any tax back or what happens?? Just trying to do a bit of research to see if this is viable or not!
 
You would incur a clawback of 1st time buyer stamp duty exemption if you rented out within 2 years.
Are you currently in negative equity?
 
I would presume I am in negative equity but not sure about how things will be this time next year which is when I'd be renting. There's no stamp duty anyway as it's a new apartment and too small in size to incur stamp duty. I would sell it if I knew I'd be able to cover my mortgage in full but seriously doubt this would be the case in the current market.
 
An investor would have paid stamp duty on the apt, irrespective of size. If you were to rent within 2 years of owning you would be classed as an investor for stamp duty purposes. Wait till October to rent out.
 
Ok thanks, that's one part decided so! :)

Who would be best to make an appointment with to go through all my options? My local revenue office or citizens info or a tax consultant or my accountant?
 
I don't really see what a tax consultant will tell you beyond who to make his bill out to. As long as you rent after 2 years you don't really have much to discuss. Stop your TRS and send in your the form indicating your rental income (loss) each year and you shouldn't have any issues, from a tax perspective.
 
Well I also get section 23 tax relief (which I guess will no longer be relevant if I'm not paying income tax in Ireland but I haven't a clue) and I get rural renewal. I'd just like to know where exactly I'll stand.
 
Did your Solicitor/accountant explain the ins and outs of those 2 reliefs when you bought the property? What benefit do you currently gain from them? Genuinely asking.
 
It's all based on income (so I'm answering my own question!). So if I'm not earning money and paying tax then I'm not going to get tax relief which is fair enough. My section 23 is taken off my tax as I get paid and my rural renewal is a cheque every year based on tax paid.

If you are interested in finding out about these:
[broken link removed]
and
www.revenue.ie/leaflets/s23.pdf
 
On having read the Rural Renewal Scheme pdf you should almost certainly talk to a tax advisor. It would appear that you lose the entire relief, both for your own use and for the use by any potential buyer down the line, if you rent the place out atall. This would reduce the value of your property by that amount.

Relief is due only where the individual first uses the house, after the expenditure
has been incurred, as his/her main residence. For example, if the owner lets the
house for a period and then occupies it as his/her main residence no relief is due.

Where the individual ceases to use the house as his/her main residence or the
house ceases to be a qualifying house the relief no longer applies. Any relief
granted is not withdrawn. A subsequent purchaser of the house is not entitled to
the relief.
Click to expand...
 
Ok, just one more question and sorry about how stupid this may sound. In other threads it says you can "offset" your rental income against mortgage interest you pay. What exactly is meant by that?

Will definitely make appointment with tax advisor to see where I would stand. Thinking it may be easier to stay in apt and go to uni in Galway instead of Belfast so I could commute up and down. Aghhhh, I wish I'd never bought the blasted apartment in the first place now!
 
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