Second Home - RTB Issue

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MrViking

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I have a somewhat complex situation and would really appreciate your advices. I have had a second home for the last 10 years in Dublin - an apartment which I have used midweek while working in the city, whilst commuting home to my PPR down the country at weekends. As it was a 2-bed apartment in the city and was technically a second home, I rented out one room under a licence agreement. As it wasn't my PPR, I could not claim rent-a-room relief, so instead treated it as a rental property in my tax returns (prorating expenses accordingly). To ensure I was able to claim the mortgage interest as an expense in arriving at rental taxable profit, I registered the arrangement as a tenancy with the RTB.

Now, I have changed jobs and no longer need to commute to Dublin and so I have rented out the full apartment. The rent is almost double what I was receiving when simply renting out a room, and therefore double what is currently recorded in the RTB's register. As the area is now a RPZ, I am concerned about what I should do in registering this new tenancy with RTB as I suspect they would simply record it as a breach of RPZ regulations though this is not the case.

Anybody here encountered this situation, and any advices as to how I best manage?
 
I would query whether your country residence (that sounds very grand!), where you spent your weekends, was really your PPR during the relevant period. After all, your friends would presumably have expected to find you in the Dublin apartment the majority of the time.

From what you have told us, I think you could (and should) have treated the Dublin apartment as your PPR and claimed rent a room relief.

Regardless, the licence arrangement was clearly not a tenancy that was subject to registration with the RTB.

Revenue published some guidance on the tax treatment of occasional income where a landlord/tenant relationship does not exist-

I don’t think you would be treated as having carried on a trade and therefore I don’t think mortgage interest should have been deducted in calculating your taxable profits.

I suspect it’s going to be challenging to regularise your position. Perhaps a tax accountant would be able to suggest a way forward.

Hope that’s of some assistance.
 
Thanks @Sarenco . I will look at this doc in more detail over the weekend. Just to clarify one point which may have been misleading in my initial post. I spent an average of 2 nights a week in the apartment, and the remaining 5 nights down the country with my family, in my “home”. So PPR is clear here. Not sure if that changes your thinking. I do have a tax accountant, who advised and guided the structure I currently have in place…..but I am beginning to question the quality of her guidance on this!
 
MrViking said:
Just to clarify one point which may have been misleading in my initial post. I spent an average of 2 nights a week in the apartment, and the remaining 5 nights down the country with my family, in my “home”.
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Ah, thanks for the clarification.

I think that probably does change my thinking but I’d like to chew over it and will post again.
 
Thinking this through, I think the fact pattern is such that you could reasonably argue that the person residing in your apartment was really a tenant and not simply a paying guest or lodger.

If that is correct, then you would have been right to register the tenancy with the RTB and to take a deduction for mortgage interest in calculating your rental profits.

Of course that means that you have an artificially low base rent for RPZ purposes and I don't think you fall within any of the exceptions from the RPZ rules.

In your shoes, I think I would just go ahead and register the new tenancy with the RTB. If the RTB do object to the new rent as being in breach of the RPZ rules, hopefully they would accept the explanation for the uplift in the rent and take no further action.
 
Sarenco said:
Of course that means that you have an artificially low base rent for RPZ purposes and I don't think you fall within any of the exceptions from the RPZ rules.
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I think that's correct. No obvious exemption entitlement for the OP.

I would be less confident that the RTB will accept the explanation. They (presumably) have some system to flag this and a 100% increase is going to be priority to follow up.

The whole RPZ concept is a total mess that drives landlords out of the market, but that's for another thread.

@MrViking - would be interesting to see the financials on this if you want to share. Very likely to be worth selling up unless you have the benefit of a cheap tracker.
 
NoRegretsCoyote said:
I would be less confident that the RTB will accept the explanation.
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I’m actually not particularly confident that the RTB will accept the explanation - it’s more of a hope than an expectation.

I certainly agree that the RPZ regime is having a perverse impact on the rental market, which was widely anticipated around these parts.
 
Sarenco said:
I certainly agree that the RPZ regime is having a perverse impact on the rental market, which was widely anticipated around these parts.
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Yes.

This particular unintended consequence is a new one on me though.

I'm old fashioned, but the state should try to leave well alone when adults engage in voluntary exchange.
 
Brendan Burgess said:
Is this not risky?
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It’s certainly not without risk but realistically what other option does the OP have (other than the nuclear option of selling the apartment)?

If the OP does not register the tenancy he would be liable to sanction by the RTB and wouldn’t be able to claim a deduction for mortgage interest payments in calculating his taxable rental profits.
 
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