Tax/Financing Implications of Renting Out my house

M

MissRibena

Guest
Hi everyone

I wasn't thinking of renting out this house until someone suggested I'd be mad not to try. Any advice on whether the following is legitimate would be gratefully received.

House I own is valued at €230,000 with mortgage of €59,000. House I want to buy to live in is €150,000 - Vendor has another buyer with cash and I'm under pressure to say whether or not I can get the money. Have been talking to the banks to top up the mortgage on existing house to cover purchase of new one. Was checking out repayments on €210,000 over 30 years at 3% and it works out around €850 a month. Definitely do-able for me.

Potential rental income from existing house is approx €750 a month. I understand that I only pay tax on this after interest for mortgage (and other expenses) is deducted; interest would be about €500 a month. Is this ok to do? And is the tax 20% CGT or 42% PAYE?

Thanks a million
Rebecca
 
M

MissRibena

Guest
Ooops

Really sorry everyone. Just realised that my question is elementary and is covered in FAQs and the transaction appears to be 100% legit. Sorry for starting the thread unnecessarily.

Rebecca
 
M

MugsGame

Guest
Re: Ooops

Rebecca, I suspect only the €59,000 outstanding would be eligble for tax relief. The purpose of the remortgage is to finance a PPR (not to purchase an investment property), so the €150,000 remortgage amount is not eligible for tax relief.

In contrast, if you were to rent out the new property and live in your existing PPR, only the €150,000 would be eligible for tax relief.

Crazy, I know. I'm sure someone will correct me if I have this wrong.
 
Top