Tax on property investment in Northern Ireland

Hi,
I'm hoping to purchase a property in Northern Ireland. I was considering getting a top up on my current mortgage to pay for some of the house and taking a mortgage out in Northern Ireland for the remainder.

50K Top Up
100K Mortgage in Northern Ireland

The top up and mortgage are interest only and my combined repayments are 300 euro on the Top Up and 400 pounds on the Northern Ireland mortgage. Rental income should be 600 pounds (all these figures are rough estimates). From the rent, 400 pounds will go off the mortgage and the other 200 pounds will go off the top up. How does tax apply to the 200 pounds that I put off the top up as I'll be bringing money from Northern Ireland into the Republic ?

Thanks

This is a bit confusing - perhaps you could clarify. Your top-up would be a further 60k on your present mortgage. So you would have a mortgage on your present property that would be interest only (presumably a lot > 60k). You would then have a mortgage in the North also which would be interest only ? As I see it you would be liable for some income tax as you're resident here but I'm not sure how it would work. I would imagine the top-up would not be taken into account and that you would get relief of tax on the interest of the mortgage in the north only. Probably best to give revenue a shout unless someone else can verify.

Thanks Elcato,
Apologies, you're correct, I have made a mistake, my current mortgage is not interest only so the top up wouldn't be interest only either. The top up will cost 300 Euro per month (210 being the interest and 90 being the principal, roughly). If I used the 300 Euro of the rent money received from the property in the North, would I be liable to pay income tax on the 300 Euro, or on the 90 Euro that goes off the principal ?

I hope this makes my question clearer !

Thanks

You'll be able to write off the interest portion against your tax bill (€210). Would you not take out the full amount you need as a sterling interest only mortgage? It would make it far simpler when it comes to paying any tax owed. Having two mortgages in two different currencies will only complicate things. Also you will need to register with the Inland Revenue in order to take your rent tax-free. Otherwise your tenant or agent is obliged to withhold the tax owed. The info is on The Inland Revenue web-site under overseas landlords.
Do you mind me asking whereabouts you're thinking of buying?

Thanks Marg,
Working the figures more accurately €470 would be the repayment on the top up, of which €100 would be off the principal and subject to tax, but I expect expenses, such as house insurance etc will come to 100 a month and negate the tax payment. I am reducing the principal on the mortgage. The northern mortgage will cost me €239 which is interest only. So combining the top up and northern mortgage payments that comes to 709, but I am paying off the principal on the top up. If I went interest only on the Northern mortgage the repayment would be €718 and I'm not paying off any principal. The down side is I'm subject to exchange rate fluctuations ! So I'm trying to work out the expenses of doing it either way and figure out which is cheapest, and the least hassel.

I presume (please correct me if I'm wrong) that I can take the rent tax-free as long as I've registered with the UK inland-revenue and the irish revenue that I am making an income but I'm paying the tax (if any) in the republic ?

Do you know whether I'd pay Irish or UK CGT if I decided to sell ?

I'm only starting to look into places to purchase, I wanted to figure out the repayments before I knew how much I could spend on a property. I was considering purchasing around the Ormeau Road area. There are also new developments due for release soon, the titanic quarter and victoria place. I'm not sure about buying an appartment, I've read it's better to buy a house rather than an appartment, plus appartments have management rates etc !

According to the Inland Revenue (UK), you are liable for CGT in the Rep of Ireland ir you are resident there, i.e. 20% CGT instead of 40%.
I have an email from them stating this.

Rental income must however be declared to the UK.

Euro top up interest, I'm not sure.

You do need to register with the Inland Revenue and they will send a cert to your agent in the north allowing them to pay you the rent in full.

You probably should also copy the Irish Revenue with your UK returns.