Utilizing House in Northern Ireland as Collateral for Mortgage in Ireland

Andrew365

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Hi,

I am going through the process of sorting out my finances now that I have settled back in Dublin. In my current situation I recently took out a mortgage in Ireland (~450k) and will be looking to trade up / change area in around 4/5 years. I have an investment property in the North purchased for 95k GBP and is worth around 105k GBP now, the mortgage outstanding is 60k GBP with 18 years left and the property has a gross yield of 6.5%. During the mortgage application having this mortgage was not detrimental but it was not positive either. I have some spare monthly cashflow to go towards paying off a mortgage and as I could pay off the BTL mortgage in NI quicker. I am wondering is this a better strategy so that in 5 years I have a fully owned asset valued in the region of 110-120k Euros rather than having a smaller mortgage in Dublin but with still a large remaining balance. This assumes I can clear mortgage in that time. I would assume that given the property is in a different country (technically) they would not let me leverage it as an asset? Anybody have any thoughts on this?

Note I am not interested in selling the BTL property whilst it still has a mortgage as the rent currently covers the majority of costs and I have a long term tenant I am not in favour of disturbing.
 
I would assume that given the property is in a different country (technically) they would not let me leverage it as an asset?
Correct.
If it was mortgage free, the rental income would count as additional income, but the physical property doesn't provide any additional security for the bank (and even less so post Brexit).
 
Correct.
If it was mortgage free, the rental income would count as additional income, but the physical property doesn't provide any additional security for the bank (and even less so post Brexit).
Thanks, I guess it will continue as a financial island for me! Previous professional tax advice stated that only if I bring the proceeds into Ireland would it be subject to tax. I currently file a tax return to HMRC.
 
I am now. Do I need to declare it?
I'm assuming the tax advice you got was while you were non-resident?

If you're resident and domiciled here, you pay Irish tax on foreign rental income. Because there's a double tax agreement with UK, you get credit for the tax paid to HMRC, so you only pay the difference.
 
I was a non-resident but it was advice given based on me becoming domiciled. I must look into this, the UK still allows non resident landlords to utilize the Personal Allowance of ~10k GBP of which my rental income is a good bit below, so my tax due is generally 0. Do you know if revenue here would allow that or would I be paying tax as if the property was located in Ireland? It would be a great help if you knew.

Moving countries has become a tax nightmare!
 
on me becoming domiciled
You were possibly always Irish domiciled, just not resident?
If you were resident, but not domiciled, you'd only pay tax if the money was brought into the country. If you're both resident and domiciled, I can't see a way of avoiding Irish tax.
 
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