# Renting out my apartment, need some advice



## jigsaw (1 Jun 2007)

hello everyone, this is my first post, i just found this site and its an absolute wealth of information, definately one to be bookmarked... anyway i have just bought a nice 2 bedroom apartment and have decided to rent it out and i want to declare the rent and do it all legit. i have been on the revenues website but there really isnt detailed information on there and was wondering if some of you lovely people could answer a few questions for me:

1.... im currently getting 177 euros interest relief on my mortgage(i bought the apartment as an owner occupier with the intention of living there but my personal plans changed), when i rent it out will i still be entitled to this or will i loose it? this is my only property.

2....Can someone tell me when  is the closing date for tax returns to be made to revenue regarding rental income

3.... Also id like to know a ballpark figure what an accountant will charge me to do mt tax returns on my property, i am also a PAYE emplyee for a company

4....im currently getting 950 euros per month for the rent which is 11400 per year, how much will my gross tax be for the year before i write off my expenses

5..... will i be liable for PRSI and if so how much? (my yearly gross rental income will be 11400 as stated above)

and last of all people, can anybody recommend a good accountant to me who is both reasonable and well experience/qualified, i opened the golden pages but there are so many and i dont really know where to start

thanks in advance

Alan


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## steelblue (1 Jun 2007)

1) You will lose this 177 as the apt will become an investment property. Also if you purchase less than 5 yrs ago, then you will have to pay stamp duty on original purchase provided you were first time buyer and didnt pay stamp duty.

2) 2007 tax yr must have returns submitted approx oct/nov 2008

3) Accountant will cost best part of 1000Euro

4) The 11400 - expenses (interest,depreciation, management etc) = taxable amount

5) No prsi as far as i know but could be wrong.

If you have only one property, i suggest you do your own tax return. By reading these forums , you can learn a lot


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## capall (1 Jun 2007)

This is pretty simple shouldn't need an accountant

You will lose the mortgage interest relief  but you can offset the interest portion of your mortage payments against rental income

Example
Rental income                               11400

Example 
Outstanding Loan 400,000
Interest Rate 4.5 %
Allowable deduction
400000* .045                               18000

Wear and Tear Allowances 
Assume fit out cost for house is 12k
.125 *12000                                  1500

Insurance                                        800
CASE V LOSS to carryforward           (8900) 

For the year 2007 you should file your self assessment return bu 31.10.08
You can use the loss here against future rental profits 

On the revenue website there is a good leaflet IT70 A Revenue Guide to rental income and IT 10 -Guide to self assessment

You can also ring them or call into a tax office if you have queries


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## Howitzer (1 Jun 2007)

Do you realise how much this will cost you in stamp duty?


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## jigsaw (1 Jun 2007)

thanks for the replies guys. i was hoping that i wouldnt loose my mortgage interest relief but what can you do eh?

my apartment cost me 256,000, i borrowed 234,000 from the bank and my 1st payment was in april, my monthly payment is 1116.08 but the mortgage interest relief brings it down to 936 or thereabouts. i will now be receiving 950 euros per month rent from the tennants

i bought all of the furniture before i rented the property out and kept the reciepts but from what i have read they are useless to me now as it was prior to the first letting. is this true?

does anybody know how much stamp duty i will have to pay, i hope its not too much as i havnmt really got a load of cash to throw around.

also if i ever move back into my aparmentment will i get my mortgare interest relief back? sorry about all the questions but im new to this game


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## jigsaw (1 Jun 2007)

please dont tell me im going to have to pay 5% stamp duty which is over 12k


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## pinkyBear (1 Jun 2007)

If you bought within 5 years and you did not pay stamp duty as you were a FTB'er yes you are liable for the stampduty at the investors rate as this is now an investment property - but it will only be based on the purchase price at when you baught and not todays valuation..


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## jigsaw (1 Jun 2007)

well it looks like im going to have to get my hands on 12k then. lets just say that i only rented it out for a year and decided to move back after the year, do i loose all of the money i paid for stamp duty and would i get my mortgage interest relief back?

i have to say im gutted, i thought i might loose my mortgage interest reflief but i didnt think id be liable for stamp duty


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## pinkyBear (1 Jun 2007)

Yes you do I think, but one of the other guys would be best placed to answer that...You could remortgage the apartment..


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## steelblue (1 Jun 2007)

Hi 

you have a number of options open to you.

1) move back in and get a lodger. You can earn approx 7k tax free.

2) Get interest only mortgage which will reduce your payments and let apt. The stamp duty will be payable on 256k - vat = 225551. 

4% of 225551 = 9k stamp duty.

3) Sell apt.


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## Ceist Beag (1 Jun 2007)

Just to throw my scenario into the ring as it's a similar situation - we have lived in our PPR for 4 years and 2 months and are now moving but were thinking of keeping the apartment. Would we have to pay full stamp duty if we rented it out now? This would come to over 7K if we did (original price minus 13.5% VAT times 4% VAT was my calculation for that) so it sounds to me like we'd be better off either not renting the place until the 5 years are up or else sell it, would that be right? Do the 5 years start when you actually move into the house or when you put the deposit down - pretty sure it's the former but would love if it was the latter as we would be over 5 years then!!


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## jigsaw (1 Jun 2007)

thanks for all the replies guys

so if i waited 5 years i wouldnt have to pay stamp duty? is this correct?

also i read on revenues website that stamp duty is 5% which would be 12800 in my case or would it be 12800- 4% VAT which would be 225551  as steelblue stated?

can someone clear this up for me?

thanks


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## Nige (2 Jun 2007)

stamp duty is applied on the value BEFORE VAT, though some solicitors miss this point.


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## asdfg (3 Jun 2007)

> stamp duty is applied on the value BEFORE VAT, though some solicitors miss this point.


 
Provided it is a new build


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## jigsaw (4 Jun 2007)

my apartment is 4 years old. does this mean my stamp duty will be 5% of the total price which is 256,000


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## Glenbhoy (4 Jun 2007)

Ceist Beag said:


> Would we have to pay full stamp duty if we rented it out now? This would come to over 7K if we did (original price minus 13.5% VAT times 4% VAT was my calculation for that) so it sounds to me like we'd be better off either not renting the place until the 5 years are up or else sell it, would that be right? Do the 5 years start when you actually move into the house or when you put the deposit down - pretty sure it's the former but would love if it was the latter as we would be over 5 years then!!


Yes - there is no partial relief - it's all or nothing, so you may be right and it may make sense not to rent it out until the 5 yrs are up.


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## Ceist Beag (4 Jun 2007)

Thanks for that Glenbhoy - given that we only have to wait less than ten months until the 5 years are up I think we'll wait so - we would probably only get in about 10K max if we rented out, which coupled with taxes, estate agency costs (if we went with them) and the stamp duty so it would not make any sense renting the place out before then. We may consider selling altogether in this case but it's time to put our thinking caps on and possibly seek some professional advice!


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## jigsaw (5 Jun 2007)

i was aware that i would loose my mortgage interest relief but unaware about the stamp duty, the problem is that my tennants have just signed a year contract to rent my place, if i had of known i would have waited the 5 years

should i just take my chances for this one year and then move back in for the final 4 years ?

i really dont know what to do


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