Hi there, I have a beautiful 2 bed apartment which I bought under the affordable housing scheme last year. The thing is that this year I have changed jobs and it is no longer convenient to live where I have been living this past year. I fully intend returning to this spartment in a year or two as all my family and friends are from the area and I fully intend to settle here. I will be leaving all my stuff in a locked cupboard in the apartment and with any luck renting closer to where my new job is. My question is this, will there be any tax implications for renting out my property or will I get into trouble with the affordable housing scheme? should I declare this or do people do it all the time without telling anyone. The way I see it is it's my apartment and peoples circumstances change without warning, I should be able to rent it out if I want. I will never sell this apartment because as I said it is and in the future will be my home. Thanks
renting out my apartment
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Yes. If the property ceases to be your PPR and you rent it out then some or all of the following will apply:
- Clawback of stamp duty (what an investor would have paid less what you actually paid which could be nothing)
- Loss of owner occupier mortgage interest relief
- Rental income assessable for income tax (see the Property Investment FAQ for an overview)
- Potential CGT liability on some portion of any eventual resale gain.
Not into trouble but they presumably have rules in place to claw back some of the benefits where people buy as owner occupiers but then rent the property out.
Should you evade your responsibilities and tax liabilities? Er, no.
Regardless of what you think should be the case there are rules governing what actually is the case and these apply to you.
right so how should I go about making all this above board. Im not going to be making any profit on the rent as what I will be getting for the rent is what it costs in mortgage repayments. I will not be making money from this move as said I am moving because my circumstances have changed. 75% of my motives for this move is to reduce my carbon fuel immisions as the public transport system is completely inadequate where I live.
You need to check the affordable housing scheme rules to see what you need to do on that front. Regarding Revenue you need (if applicable) to pay the SD clawback immediately on first renting, register with the PRTB and then do annual returns of rental income. You also need to cancel your owner occupier mortgage interest relief if you rent the property out. Your lender may need to know about the change of use and you will certainly need alternative insurance cover for the rented property as ordinary home insurance will not suffice. The Property Investment FAQ summarises many of the issues that arise from being a landlord. You probably need to get independent, professional advice (e.g. from an accountant) on your tax liabilities and how to deal with them.
This is irrelevant other than that you can offset interest on the mortgage against rental income. Revenue don't care if you are making a loss otherwise (e.g. mortgage repayments less interest and allowable expenses exceeds rental income).
That too is irrelevant in this specific context I'm afraid.
The way you've presented this whole thread sounds completely contrived. I don't think Revenue would accept for one minute that 75% of your motives for renting out your Affordable property is to reduce your carbon footprint. You may be 100% genuine but Revenue would take your story as being completely fabricated and slap you with the appropriate fines/taxes/interest. Don't work under the illusion that Revenue will just accept your word. Find out the EXACT rules and work within them.
It sounds like you've already decided to take the chance, and arrah shure how would they ever know? This is a terrible decision to make.
Yes - your tenant will probably claim rent relief thus alerting Revenue to your situation as a landlord. If you don't register with the PRTB you are in breach of the law and would not be able to offset mortgage interest and other allowable expenses against rental income. I would imagine that the local authority (?) who oversee the affordable housing scheme could probably find out about the rental situation too if this is relevant to whatever rules govern the scheme.
All in all the prudent thing to do here is to clarify your rights and responsibilities and then sort them out rather than ignoring them and attempting to evade tax etc.
Yes. Risky and dumb.
well thanks all for your input, nice to know there are so many squeeky clean people here in Ireland. I too am squeeky clean but find myself in this unfortunate position. As said I am living and working in seperate parts, my journey time is at least 3.5 hours a day. I have just found out that under the affordable housing scheme you can not rent out your property. I understand they do not want investors taking advantage of the scheme but I also didn't realise that when I was signing I was commiting to staying in the same apartment for the rest of my life. It seems a bit bizarre that at 27 I should sign for a property that I can not leave!!!! Well I can leave it but at a massive penalty which I can not afford. What am I supposed to do when I get married and have children? It'll be a bit of a squeeze here in this little apartment. I will be forced into selling a home that I put an enourmous amount of effort into getting, I worked and saved for a number of years to get this home. Im single now and it looks as though I'll have to stay single to stay within the affordable housing rules or at least not expand my family as we all wont fit! Does this strike anyone else as odd?!?!
Sometimes I wonder why some of us bother giving useful advice to people like this...
If you want to evade your responsibilities and liabilities then go ahead but it would be a really stupid, dangerous and (some would argue) immoral thing to do. But please don't ask for advice on acting illegally here on AAM.All irrelevant to the tax and affordable housing issues.
Did you not get legal advice? Did your solicitor not point this stuff out? Did you not read anything that you signed?
That you never read the contract details and undestood the implications of the affordable housing scheme? Yes.
clubman as said thanks for the advice, I was being genuine. Admittidly you do have a slightly self-righteous if not totally condescending tone to your responses but thanks for the advice all the same. With regards to not understanding what I was signing you see Im a little dumb and I have to come here to ask good, kind and oh so clever folk like yourself for advise and thus giving their enormous ego a much needed massage!!
So now you're getting personally offended because the (good) advice you've received isn't what you wanted to hear. Well there's not much anyone can do about that.
Exactly what was going through your head when you made the initial purchase. Why didn't you look into the future consequences of your actions?
Exactly what was going through your head when you applied for, interviewed for, and then accepted a job which would entail a 3.5 hour commute when you had a brand new apartment which you would have just closed on months beforehand?
These are hard tough financial and personal decisions that people, grown up people, have to make in the real world. A woe is me attitude will not make these things go away. Read the documentation BEFORE you sign it. Think of your future personal circumstances BEFORE you make long term financial commitments.
If its a 2 bed apartment you could look at renting a room without stamp duty implications and without incurring the wrath of the affordable housing
The room rent you get should hopefully go someway to cover the rent you will incur -if friends and family are in the area then you would probably be coming back at weekends ,evenings anyway, -move into the small room and leave your stuff there -Otherwise sell the place and pay the clawback out of the proceeds-
The room rent you get should hopefully go someway to cover the rent you will incur -if friends and family are in the area then you would probably be coming back at weekends ,evenings anyway, -move into the small room and leave your stuff there -Otherwise sell the place and pay the clawback out of the proceeds-
ye I found out today that that was a possibility and it would be an option alright. I'll think about that one but it would still mean renting another place in town. I've rung around to firends of friends etc that have bought and rented out affordable homes and thats what they are doing, rentning out one room and keeping their stuff in the other while renting somewhere else. I wouldn't risk losing my apartment for this so it'll have to be either rent out the one room which is all above board and legal and rent another in town or just stay put and not do anything. I'll chew it all over, thanks
K
KalEl
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You've come onto a site where people help each other with genuine problems and received advice about the correct course of action. Because this didn't fit with your plans you've chosen to seek advice on how to defraud the Revenue and the local authority who were generous to subsidise the purchase of your home. And when this advice was not forthcoming you chose to make snide remarks about the righteousness of others. Your attitude is outrageous.
ah blow it out your old whazoo!!! I never intended defrauding anyone and I don't appreciate being called dumb - ever! Now I came on looking for advice not a flipping moral show down. I am honest in all my endevours and as for the nice county council well when I was purchasing this house they gave me advice unofficialy of course that with regards to my financial situation that sometimes you are better off just keeping your mouth shut about certain things. So please please do not lecture me on my morals any of you and do not call me or anyone else dumb for that matter!
K
KalEl
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It strikes me as odd someone would sign up for a scheme without understanding it. It's not like we're talking about small print...it's pretty clear that because you're getting a property at a discounted rate you cannot become and investor or speculator and profit from this discount. The time you have to keep the apartment for (10 years I think) seems quite fair.
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