renting second property, where to start?

[catgirl]

I am getting married next year. Both myself and fiance own our own homes. We plan on living in his and renting mine out. When I bought mine it was exempt from stamp duty. Basically I dont know where to start, ie paying tax etc. I reckon I will get €950 a month in rent. The mortgage is €700 a month. Will the rent cover the mortgage after tax? Has anyone been in a similar situation?

 

[RainyDay]

Have you read the FAQ & key posts in this forum?

 

[Protocol]

First of all, as your house will switch from being your Principal Private Residence to an investment property, you may face clawback of the stamp duty exemption that you got.

This means you will have to now pay some or all of the earlier stamp duty that you avoided.

Second, you won't recieve TRS anymore, as you no longer occupy the house.

Next, you may deduct the mortgage interest and ongoing expenses from the gross rent received to arrive at the taxable rent.

Example:

950*10 months (assuming 2 months empty) = 9500 gross rent
less 500*12 mortgage interest (estimated) = 6000
less annual maintenance expenses (estimated) = 1000

= 2500 taxable rental income

This is taxed at your marginal rate (0%, 20% or 42%)

You will also pay CGT if you sell the investment property in the future.

 

[elcato]

If you bought the house more than five years ago you are not liable for Stamp duty clawback.

 

[DonKing]

In addition to the tax at your marginal rate 20% or 42% you will have to pay 2% health levy on your taxable rental income