To sell or not to sell?

J

Jon_08

Registered User
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Hi all,
Looking desperately for some advise. Some may say I was turning the blind eye, but I honestly never knew about this Stamp Duty Claw back cause.

I bought the house back in August last year, was living there in one of my rooms (I rent the rooms in the rent a room scheme) I decided to move out November as I was advised to by my accountant. As whilst in the house I can make upto 10k tax free and anything over that is taxable. He advised once I moved out the property no longer is my primary residence and that I could claim expenses and the interest on my mortgage as an expense thus drive down the tax I owed.

Seems this is not the case? I was misadvised, it wasn't intentional. I'm a new start, and assumed what the accountant said was gospil.

I'm stuck now, and unsure on where to go... I can't afford the mortgage, as it was never bought to live in.

But, if i continue to rent the rooms, I'll be done for the stamp duty claw back. and from what I read will be taxed on the total income of the house?

If I move back in and rent a room, the house will make over the €10k mark which means I won't be ledgable for the rent a room scheme. and I assume the total revenue made on the house will be added to my gross income, so will be charged at 42%??

I'm lost on where to go, nobody I've spoken to seems to have answers... would I be better off selling?? even if the housing economy is at an all time low??

Awaiting your help, and guidance!!!

thanks a mill


Jon
 
Hi Jon,

You got very badly advised by your accountant. Get him to explain why he didn't make you aware of the stamp duty clawback (in writing if you can).
Re your present situation - once you moved out and rented out the house it became an investment property. If you had stayed there you could have just charged the tenants €10k and forgone the extra rent as you would have only paid back more in tax, but sorry that it's a bit late telling you that now (surely a €10k contribution would have made the mortgage affordable). If you bought last August I presume you have negative equity, so selling up wouldn't solve your problems.
 
Hi,
To be honest the "move out" wasn't an all end all move out.. I'm bunking in at my girlfriends place till I sorted out what I wanna do.. My main residence is still at the rented house..

Also, I bought the house in June, sorry my mistake (time flies when your having fun). I think the rental may of come close to the 10k mark.

Are they particular to this amount? or are they ok if your one or two hundred over?

Honestly, lost and kinda panicked... Don't have the slightest idea where to go from here.

Don't wanna get into problems with Revenue, and honestly cant afford the hefty stamp duty at this stage

Would I be better off moving back in and pretending I never left?
 
Jon_08 said:
Would I be better off moving back in and pretending I never left?
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Have you considered what would happen if one of your tenants informed the revenue that you weren't there full time. I am sure they would not look very favourably on you and you might get an even bigger bill than you expected.

I would adivse coming clean with the revenue, I don't know how they treat cases like this but I would not like to have to worry whether you will be found out at some stage in the future.
 
You proably need to get professional advice. This time from somebody who knows what they're talking about!
 
From what I've read here I thought you had to be out 12 months before there was any stamp duty claw back so surely he can move back in and avoid that?
 
Hi

Also bear in mind that your tenents can claim rent relief from the Revenue up to four years in arrears. So, even if you say nothing now, it could come back to haunt you in the future.
If there is any paper record of rents paid then you will have to come clean as it is too big a risk. If you come clean, you will probably have to pay the full stamp duty in one
instalment to avoid interest.


 
moneygrower said:
From what I've read here I thought you had to be out 12 months before there was any stamp duty claw back so surely he can move back in and avoid that?
Click to expand...

I think you are misunderstanding. You have 12 months after you vacate your PPR to sell it, otherwise it becomes liable for CGT. If you vacate your PPR and rent it out, then you are liable for stamp duty clawback.
 
Hi guys,
Thanks for all the replies.. checked it out, the house made just under the 10k mark last year so I'm safe there.

I'm moving back in myself fulltime, so will be getting no additional income from here on in. THat'll keep me in the limits this year also.

The tenants won't say a word that I haven't been there for 2months, technically all my things and bills still go there, so paperwise I didn't leave.

Hopefully this will keep me covered.

Hefty mortgage repayments, here I come.
 
Jon - Never ever take advice from that solicitor again. You are very very lucky that you came in under the €10,000 mark. One cent over and 42% on the lot and stamp duty. A second opinion, even on the net can help. Best of luck and my best to the living alone girlfriend. Only messing good luck
 
One cent over does not mean stamp duty clawback. It does mean tax ( @ 20%) on the total amount though.
 
plant43 said:
One cent over does not mean stamp duty clawback. It does mean tax ( @ 20%) on the total amount though.
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Really? I assumed that once you stepped over the 10k limit you lost all benefits? Ie had to pay the clawback, and 40% on your total earnings?
 
Jon_08 said:
and 40% on your total earnings?
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On this specific point - rental income not tax free under the rent a room scheme is assessable for income tax at your marginal rate. It doesn't automatically get taxed at 41% (never mind 40% or 42% mentioned above which are not current income tax rates at all).
 
Seems to me like you should keep renting out the spare rooms for the €10k per annum and have the girlfriend bunk at your place rather than the other way round.
I think the revenue would have a hard time proving that you'd somehow changed your residence just cause you hung out at the girlfriends for a couple of months, "coming clean" to the revenue about this seems like a ludicrous suggestion to me!!
 
Thats the plan alright.. But, she's not fond of living in a house full of guys.

We'll be renting the whole house between us; didn't do this originally, as thought the house was more valuable rented out.. live and learn suppose.

Thanks for the guidance!
 
Sorry... Should really explain myself in more detail.

The house was originally rented, but due to the crap advice and things above I've decided to move back in permantly, with the girlfriend.

we'll be occupying the whole house ourselves, no rooms rented, nothing.

It seems you cant make a penny anywhere in Ireland without getting taxed through the nose..

Stamp duty.... tax on money made... and then CGT!

Is there no end?

Whats next? Air will more than likely have a tax in the not to distant furture... *rant over*
 
Jon_08 said:
It seems you cant make a penny anywhere in Ireland without getting taxed through the nose..
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This is not correct - for example you can obviously make up to €10K p.a. on the owner occupier rent a room scheme and avoid tax through any orifice.
Stamp duty.... tax on money made... and then CGT!

Is there no end?
Click to expand...
Investors are subject to these taxes. Your problem is not so much the tax rules but rather that you seem to have received bogey advice.
Whats next? Air will more than likely have a tax in the not to distant furture... *rant over*
Click to expand...
Er - right....
 
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