This is terrible advice.
1. The day you rent the place you will become liable for stamp duty clawback at the rate that an investor would have paid on your property. This could run to 10s of thousands of euros.
2. You will no longer be eligable for mortgage interest relief. This will INCREASE monthly mortgage repayments.
3. You will become liable for CGT on any gains when you eventually sell.
4. IF, and this is a really big if, but IF your rental income exceeds your mortgage interest payements then you will be liable for income tax at your marginal rate (41%) on this profit.
Failure to pay these tax liabilities will result in significent penalities and interest, irrespective of whether your mate down the road has done this.
The best route in these cases is always to avail of the rent-a-room scheme and stay within the bounds of the tax breaks available to you.
This is terrible advice.
1. The day you rent the place you will become liable for stamp duty clawback at the rate that an investor would have paid on your property. This could run to 10s of thousands of euros.
2. You will no longer be eligable for mortgage interest relief. This will INCREASE monthly mortgage repayments.
3. You will become liable for CGT on any gains when you eventually sell.
4. IF, and this is a really big if, but IF your rental income exceeds your mortgage interest payements then you will be liable for income tax at your marginal rate (41%) on this profit.
Failure to pay these tax liabilities will result in significent penalities and interest, irrespective of whether your mate down the road has done this.
The best route in these cases is always to avail of the rent-a-room scheme and stay within the bounds of the tax breaks available to you.
Batty is a first time buyer so as soon as she rents the property, she becomes liable for a stamp duty clawback plus she loses her TRS. If she pays the clawback, registers with the PRTB, she can then deduct mortgage interest from rental income but only at the end of the tax year. Her dilemma is cash flow now. She's finding the mortgage difficult to cope with so how would she afford to pay clawback and the mortgage while losing out on TRS. The rent a room scheme is a much better option if it's feasible.Batty, the best advice is to switch it over to an Interest Only mortage for a year at lest until the dust settles, then rent it. This way it will allow to be completed. People will start buying again. No-one out there is moving until it is over. People are staying put. My next door neighbour had tried to sell his house for nearly 10 month, eventually had to drop it and move on, he had to, he was moving back home to Cork. If you are getting lip service, move EA, some are not putting efforst in as they knwo the activity in teh market has stopped due to the obvious reasons. Best of Luck!
I said that to rent is normally more, than to mortgage and to check out Daft. If one does that and compares, it's true.
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