Renting out One Bed Apt

Myself and girlfriend are currently living in a one bed apartment which we bought back in 2006 at the top of the market.
We now have a six month old baby and are looking to move out for a bit more space.
We are thinking of moving out, renting out the apartment and starting to rent a two or three bed house.
My question is how much will it actually cost us per month to declare everything?
Will I lose all my mortgage interest relief?
How much could I possibly expect to gain back for tax relief as a landlord for the likes of management fees etc?

Mortgage is around the 280k mark with repayments around 1k per month. We could expect to get 8-900 for rent p.m. We are in massive negative equity so selling the house is not an option.

1) You would lose your TRS so that would bring your repayments to 1100 per month.
2) Do you have a tracker mortgage ? This could be lost on moving out also.
3) You can claim reliefs on your payments but usually you will need to pay income tax on your annual rent also.
4) You could have problems with tenants regarding your furniture/upkeep of property.
5) Rental is not guaranteed all year round so allow for say at least one month where you dont get rent per year.
6) If/When you ever resell it you could be liable for Capital gains on the time it was rented.

*As a general rule of thumb (purely my own personal opinion), I would multiply the monthly rent expected by 10 and allow 20% to be taxable (usually at higher rate plus levies) i.e circa 50% and that gives you the numbers.
So say 800 per month * 10 = 8k.
20% taxable is 1.6k @ 50% = 800 tax.
Repayments are 13,200
You're net return 7.2k
Can you afford the hit of 6k just to keep it ?

*Disclaimer: Based on general circumstances and made up quickly here to answer your question. Others may add/disagree in time.

Don't forget the PRTB registration fee per tenancy plus the €200 NPPR levy. You will still have to pay your management fee but that is tax deductible, and you can allow for some wear and tear on the fixtures and fittings which is also deductible. But as the previous poster said, you are facing a huge hit of thousands per year.

Thanks very much for the responses guys.

Looks like we won't be moving out any time soon!

Seems to me a very unfair system for people who are moving out to rent and can't sell there place because of negative equity. It's not as if we are going to be any better off either way. We're not property speculators or anything just looking to have a little more space for a family. Is there no way at all round this?
What are the chances of getting caught if we just went ahead and rented the apartment without declaring it?
Literally won't be able to have any more kids if we don't move out! And we're not getting any younger either!...

All our own fault for falling for the property spin but still seems incredibly unfair..

Bear in mind that the penalty for non-registration with the PRTB can go as far as prison...not to mention the issue of tax evasion...you could end up in a whole lot of trouble.

gola said:

Is there no way at all round this?
What are the chances of getting caught if we just went ahead and rented the apartment without declaring it?

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If you are looking for encouragement to avoid paying tax you will not get it from me.

I am sick to death of sleeveen practices from our elected "elite" from our bankers from those on SW claiming yet working...its no wonder this Country is fubared,yet its my taxes that are paying for all this corruption.

You know what? I hope you do and I hope you get caught,because when they catch up with you,and they will,you wont have to worry about the apt as you will have to sell it, to pay off the interest and penalties and outstanding tax.

There's not much point in not declaring the rent if you're going to be receiving €200 less than mortgage. Even though only 75% of the interest is tax deductible this will still be a significant portion of the €1,000 mortgage per month. When you add in House Insurance, Life Assurance, Mangt Fees & other misc rental expenses, you will in all likelihood end up with a taxable loss so won't have to pay any tax at all.

You would need more accurate figures regarding interest etc before a final decision could be made but if you were able to rent somewhere that the rent you are paying is in or around the same as the rental income you are receiving you probably won't be much worse off than you are now.

Rental Income = €800 x 10 mths = €8,000

Expenses
Interest - say €800 x 12mths x 75% = €7,200
Mangt Fees = €1,000

Already that's a loss without taking things like House Insurance, Life Assurance & Capital Allowances into a/c

Therefore no tax to be paid on apartment

The problem will be if the apartment lies idle for a couple of months because then 2 mortgages have to be paid.

Knuttell said:

You know what? I hope you do and I hope you get caught,because when they catch up with you,and they will,you wont have to worry about the apt as you will have to sell it, to pay off the interest and penalties and outstanding tax.

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Last paragraph is well out of order. In fact, hoping someone breaks the law and is then penalised sounds a little sadistic.