# Can I rent my house without making a loss?



## ado12497 (9 Feb 2009)

Hello to All,

Just new to this so hopefully it works for me! I am anxious to move back to Dublin from a commuter town asap but I don't think my house will sell anytime soon considering a house on my road is for sale over a year now. So I am thinking of renting it out and then I could rent a place in Dublin until things pick up.
I am on a tracker mortgage and my last payment was 942(capital and interest) - 97(TRS)= 845. I thought that if I could just rent the house out for 850, my mortgage would be covered but then found out that I lose my TRS and also would have to pay tax. This could bring my mortgage back up to over a 1000 and I don't think I could get somebody to pay me 1000pm rent considering that similar propertys in this area are renting for between 800-900avg. 
So I'd appreciate it if you could help me...
Should I change my mortgage to interest only and if so for how long?
Should I take a 3 month break on my mortgage?
Is there anything else that I can do to help balance these figures as I don't fancy adding 200eur to cover my mortgage?
What part of my mortgage/rental income will become taxable?

Thanks,
Ado


----------



## shesells (9 Feb 2009)

Sounds to me like you should try to convert your mortgage to interest only. This is the better option for property you're renting AFAIK.


----------



## Oilean Beag (9 Feb 2009)

You mayfind it difficult to rent out a house in a commuter town. This may be problematic if you will be relying on the rent generated to make ends meet re mortgage and rent in another house in Dublin.  In commuter towns the time bewteen tenants and the chances of not finding good tenants are much increased. 

Also note costs :

1. Lose tracker mortgage rate
2. Lose TRS
3. Any income tax due on rent
4. PRTB registration
5. Any claw back on Stamp Duty if purchased less than 2 years ago.
6. Increased house insurance.
7. Refinishing on relets ( Painting etc)
8. Your time in managing the property!


----------



## asdfg (9 Feb 2009)

> Should I change my mortgage to interest only and if so for how long?


 
Yes as long as possible, but pay any profit after tax and expenses off against the principal each year 

Bear in mind that you may not rent each month for the expected rental income

See the Guide to rental income from revenue.
Remember you can offset the interest on the mortgage and other expenses against rental income before arriving at the profit. The profit is then calc at your marginal rate of tax. 

You have to register with the  and get a  (If you are selling you will also have to get this) These exps can be offset against the rental income.


----------



## Bob_tg (9 Feb 2009)

A friend of mine recently tried to move his mortage to interest only and got massive resistance from the bank.  He got it in the end (for 12 months) - but had to fight hard to get it.


----------



## ado12497 (10 Feb 2009)

Thanks for helping me out guys, with your advice I can now see how it is possile that all other landlords in my area are renting for such a low price.

I was onto my bank today and they said that it should be no problem changing to interest only and that taking a 3 month break from payments would probably be harder to get. 
SNB... are you sure I will lose my tracker mortgage because my bank told me that it would not be affected. I appreciate all of your points and advice but think it is achievable if I change to interest only so hopefully my bank can approve.

And thanks for the links asdfg


----------



## Square Mile (10 Feb 2009)

Hi

If you rent out your house it ceases to be your PPR and you will have to pay capital gains tax when you eventually sell it.  Revenue will give you one year leeway in which you will still be exempt from CGT.  After that CGT is charged on a sliding scale which contains some element of indexation.  

It has been discussed before on AAM.  Check previous threads and also check the revenue website for the latest information.

SM


----------



## Oilean Beag (10 Feb 2009)

I would get it in writing from the bank that you will retain your tracker rate mortgage. The banks are trying to get rid of as much of these as they can as they are proving unprofitable with all the rate drops that have been occurring.

My experience is that these things can promised by an anonymous or first name basis call centre advisor and then when it comes down to it , it usually is too good to be true.

If you do succeed in holding onto your tracker while converting to an investment mortgage you might let us know what bank you are with ? Could be helpful to others in your situation.


----------



## ado12497 (10 Feb 2009)

Cheers square mile, I didn't know about the capital gains tax and this will obviously be a big factor when I eventually sell the property. 
SNB, I will let you know how I get on with the tracker mortage, hopefully they won't let me down.


----------



## minion (10 Feb 2009)

Look here at the rent a room scheme.

[broken link removed]

My advice to you is to keep the house as your PPR.

You can keep it as you PPR by keeping a room in it.  If you live in Dublin during the week but that is your main place of residence you will qualify.

That way you dont have to change your mortgage and can earn up to €10000 a year tax free from the remaining rooms.


----------

