# Own apartment for just short of 2years. Going travelling :Rent-a-room Scheme?



## d3481553 (11 Jun 2009)

Hi, I own an apartment which Im thinking about renting as I would like to do a bit of travelling.

I have done some research and renting a property is a daunting task to say the least as theres an awful lot involved and a lot of bases to be covered. The other caveat is that I would be about 3 months shy of the 2 years that you have to own a property before you can rent it.

My question is could I just get away with renting it under the rent-a-room scheme? I am not buying another property as my PPR, technically it will still be my PPR, Im just going on an extended holiday. While my potential lodger would be paying rent for the whole apartment, I could argue that he is only renting a room, he just happens to have the use of the whole apartment while I am on my extended holiday.

Does this sound reasonable?


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## mathepac (11 Jun 2009)

*Re: Rent-a-room Scheme*

No and don't expect to get much support for attempted tax evasion here.

What happens when your 'lodger' goes to claim tax relief on the monthly rent?

What happens when your lodger goes to deduct 20% of the rent payable to a non-resident landlord?

What happens if there is a fire or other damage to your property contents while you are 'on extended holiday'?

What happens if, with the utilities still in your name, your 'lodger' fails to pay the bills?

'technically it will still be my PPR' - utter nonsense, once you rent it it ceases to be your PPR, its an investment property.


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## Cayne (11 Jun 2009)

*Re: Rent-a-room Scheme*

You have to operate within the tax rules on this one. Wait out the 3 months and rent it out then is my advice. Then go and enjoy your travels without fear of ever having an audit with the revenue.


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## d3481553 (11 Jun 2009)

*Re: Rent-a-room Scheme*

Thanks for the advise Cayne, Im inclined to agree with you

@mathepac
I think you need to calm down a little, Im on here to ask legitimate questions. I have no intention of evading tax but if theres a chance of doing things easier while not breaking any rules, I will explore all possibilities. I've simply asked if what I suggested is feasible, but its not and thats fine. Hopefully you can be a little more tolerant with other first posters looking for help.


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## elcato (11 Jun 2009)

*Re: Rent-a-room Scheme*



> The other caveat is that I would be about 3 months shy of the 2 years that you have to own a property before you can rent it.


I dont understand. If it's stamp-duty you are trying to avoid paying its five years but maybe this is social housing related or something.


> What happens if you could be more civil with a first time poster?


Eh ! So pointing out a blatant tax evasion ploy to someone in simple english is uncivil ? Maybe if the OP _hugged _the rule bug that would make him feel better ?


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## d3481553 (11 Jun 2009)

*Re: Rent-a-room Scheme*

@elcato
Im a first time buyer and was therefore exempt from stamp duty and as far as I know you have to wait 2 years before you can rent your property otherwise you're liable for stamp duty clawback

...and I have no problem with people pointing out flaws in my reasoning, as Cayne kindly did, but theres a civil way of doing it. The forum is supposed to be a community of people with similar problems and solutions, not a firing range for people with slightly naive questions.

I just wanted advise from someone wiser on this subject than me. I don't think that advise should be dished out in the form of a boll0cking. I have no interest in tax evasion, if I did, I wouldn't be coming on here asking how to do things legitimately. I fully intend on registering with PRTB .etc.


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## samanthajane (11 Jun 2009)

*Re: Rent-a-room Scheme*

If you can wait the 3 months then i would do that. 

Also something else to think about, i was reading a thread here the other day, someone thinking of doing the same as what you are, and when he spoke to his mortgage provider he ws told he woud have to move to an interest rate for an investment property which was a fair bit higher than what he is paying now. 

I'm not sure if it's breaking the law to just not tell them about what you are planning. But best to find out what could happen if they found out you weren't living in the property anymore.


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## d3481553 (11 Jun 2009)

*Re: Rent-a-room Scheme*

Hmmm, interesting, I've been onto the bank a couple of times saying Im considering it and they havn't mentioned it, but more food for thought anyway, thanks


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## mathepac (11 Jun 2009)

*Re: Rent-a-room Scheme*



d3481553 said:


> ... I have done some research and renting a property is a daunting task to say the least as theres an awful lot involved and a lot of bases to be covered. The other caveat is that I would be about 3 months shy of the 2 years that you have to own a property before you can rent it...


I think it is patently obvious what your intentions were coming on here. Having carefully researched the topic and identified some of the pitfalls and taxation issues, you pose the following - 


d3481553 said:


> ...  My question is could I just get away with renting it under the rent-a-room scheme? ...


Someone who wants a legal and honest way out of a tax dilemma they have identified doesn't ask ' ...could I just get away with... ', which IMHO is an tax evasion question, but might ask something like 'Is there a legal way to avoid the taxes I will have to pay in the circumstances I describe?'


d3481553 said:


> ... technically it will still be my PPR, ... I could argue that he is only renting a room, he just happens to have the use of the whole apartment while I am on my extended holiday...


Finally, the language traits which IMHO are the last refuge of the potential tax evader 'technically'  and  'I could argue' and 'he just happens to have'.

In my view AAM has a reputation as a source of good honest information for tax-compliant individuals who pay their way and again IMHO there is no place for tax evasion type questions on the site.


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## d3481553 (12 Jun 2009)

*Re: Rent-a-room Scheme*

You have serious issues mathepac, disecting the semantics and context of each line of my post. I have repeatedly explained my position, that I have no intention of breaking any laws, Im simply looking for the most painless way of renting my apartment. I know nothing about this and Im starting from scratch so cut me a little slack and don't assume the worst of people straight off the bat.

The rest of the members have put forward useful constructive advise and even your first post had useful information although it was put across quite agressively. Theres no need to have a go at people, jump down their throat and accuse them of tax evasion. A simple 'no, you can't do that' would have done.


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## Cayne (12 Jun 2009)

*Re: Rent-a-room Scheme*



elcato said:


> I dont understand. If it's stamp-duty you are trying to avoid paying its five years but maybe this is social housing related or something.


 
Hi Elcato, rules changed back in 2007 - reduced the timeline for stamp duty clawback back to 2 years from 5.


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## so-crates (12 Jun 2009)

*Re: Rent-a-room Scheme*



d3481553 said:


> You have serious issues mathepac, disecting the semantics and context of each line of my post. I have repeatedly explained my position, that I have no intention of breaking any laws, Im simply looking for the most painless way of renting my apartment. I know nothing about this and Im starting from scratch so cut me a little slack and don't assume the worst of people straight off the bat.
> 
> The rest of the members have put forward useful constructive advise and even your first post had useful information although it was put across quite agressively. Theres no need to have a go at people, jump down their throat and accuse them of tax evasion. A simple 'no, you can't do that' would have done.


 
Hmmm - while I do think that mathepac was perhaps a bit abrupt in his post - your "righteous" indignation doesn't ring true. He didn't have to analyse your original post to arrive at exactly the same impression I and the other posters did. You knew what you were about and were looking for a way to get around/evade/avoid (choose your own spin on it) the cost to you of renting your apartment. You knew the right answer, you just wanted to see if there was a way to avoid it.

Do yourself the courtesy of admitting your own intelligence. Pretending you didn't understand that your question is readily understood (not construed, interpreted or inferred) as being tax evasion is not doing yourself justice.


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## ajapale (12 Jun 2009)

*Re: Rent-a-room Scheme*

Management Companies, Apartments, is not the correct sub forum for this type of question. Management Companies, Apartments, relates to management of shared areas and multi unit developments etc.

Moved to  Property Investment which is the forum which deals with landlord / tenant / rent-a-room issues.

,
As mathepac, so-crates and elcato (moderator) have pointed out we do not condone or discuss tax evasion schemes on AAM. Please do not engage in personalised exchanges with posters who point this out.("serious issues etc).

Legitimate discussion which focuses on the optimum legal way for you to manage your apartment while you are on your travels is allowed.

Ive expanded the title somewhat to more accurately reflect the question.

aj
moderator


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## d3481553 (13 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*

Thanks for moving aj, I actually thought at the time I may have been posting in the wrong section. I think the amended title also reflects the honest nature of my original question, so I also thank you for that.

I obviously should have chosen my language more carefully as the 'get away with' bit seems to have gotten peoples backs up. I meant 'get away with' as in doing the minimum while staying within the law in the same way that you can 'get away with' worn tyres once they're not below the minimum tyre tread depth or 'get away with' having a glass of wine without being over the legal drink-drive limit.

Theres ways to reduce your tax bill without it being tax evasion (I just don't know them). A man can reduce the tax he pays by using his wifes tax credits (very loose example I know, but I can't think of anything else), does this amount to tax evasion because he's using a legal means by which to pay less tax? Thats all I was trying to do, exploring IF there was a way to makes things easier on myself. I never had and have no intention of breaking the law or discussing tax evasion schemes. I just thought the rent-a-room scheme might be an option, which it clearly isn't.

I've gotten a pretty hard time on here for an honest mistake or what some people believe to be a calculated ploy based on my perceived intelligence, which is unfair.

Thanks anyway for the bits of information people offered.


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## murphaph (14 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*

I'm not so sure it's as cut and dry as is being made out here. 

Say I own my house 20 years and happily pay all my taxes etc. and I take in a lodger for 5 years under the rent a room scheme and he pays for a room in my house, then if I want to go on a round the world trip, do I have to eject the lodger? I doubt it. It's still my PPR. It's my home. When we go on holidays (ie, NOT to work abroad), even for a prolonged period it's still your PPR otherwise you'd be liable for CGT and everything which is obviously rubbish.

If the OP is content to take a lodger at the going rate for a ROOM and not the whole house (would exceed the 7k per annum limit on rent a room scheme anyway) then he should legally be able to go off on holiday and keep his lodger.

It WOULD be tax evasion if the OP conspired with the lodger Or lodgers to pay something under the table etc. to keep the declared income below the limits for rent a room. If I was the OP and I wanted to go travelling I would have no hesitation in seeking a trustworthy lodger for a few months before I go (so I could assess them before I left) and then get a family member to watch my house for me while I was away, collecting the rent (acting as a lawful agent) and making sure the bills were being paid.

If the OP needs the full market rent of the entire house (presume 3 bed in Dublin) to service his mortgage then it's obviously not going to be possible within the law. If the OPs mortgage is low enough and/or he has savings to make up the shortfall then taking a lodger in seems a reasonabe thing to do.


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## ajapale (14 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*

I think you need to get professional independent tax advice on the matter.

aj
moderator


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## WaterSprite (14 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*

There were a number of threads a while back (could be a couple of years) about the whole question of whether travelling for a long period changes the nature of your PPR.  Revenue seem to take a view of saying  "well, let us know the details and we'll tell you if your PPR has changed" - which is not ideal if you are enquiring after the event.  

OP, I would also second ajapale's advice to seek professional advice, else write to the revenue and set out your exact intentions as to how long you'll be away, whether you will be working etc. and ask them for a view in advance.

OP, I think the reason you got a bit of a reaction was indeed your choice of words.  Some people post onto AAM with thinly disguised (or not disguised at all) pleas as to how to evade tax and they generally get short shrift, and rightly so in my opinion.  Due to your phrasing, I'd imagine some thought "here's another one" (as I did when I first read your initial post).  

Slightly off topic to this but I do think that, when people do post about e.g. squeezing themselves into exemptions and reliefs that they are really not entitled to, the should be told straight up that it's unacceptable.  In situations like that, I'm not in favour of the "if you don't have anything nice to say, don't say anything at all" view.


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## d3481553 (16 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*



murphaph said:


> I'm not so sure it's as cut and dry as is being made out here.
> 
> Say I own my house 20 years and happily pay all my taxes etc. and I take in a lodger for 5 years under the rent a room scheme and he pays for a room in my house, then if I want to go on a round the world trip, do I have to eject the lodger? I doubt it. It's still my PPR. It's my home. When we go on holidays (ie, NOT to work abroad), even for a prolonged period it's still your PPR otherwise you'd be liable for CGT and everything which is obviously rubbish.
> 
> If the OP is content to take a lodger at the going rate for a ROOM and not the whole house (would exceed the 7k per annum limit on rent a room scheme anyway) then he should legally be able to go off on holiday and keep his lodger.



Thanks for your thoughts murphaph, funnily enough I was discussing this with a work colleague yesterday and he pondered the same point as you. I definitely think independent tax advise is a good idea, anyone know if you can hire a tax consultant on an hourly rate to have a chat about it? I think the easiest thing to do at the moment is to ring the revenue as suggested by my work mate and WaterSprite and see what they say

My (2 bed)apartment is outside Dublin and would fetch 600-650 p/m, so I assume the rent-a-room scheme would cover half of that, so I would still need to pay at least 300 per month + half the bills


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## murphaph (16 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*



d3481553 said:


> Thanks for your thoughts murphaph, funnily enough I was discussing this with a work colleague yesterday and he pondered the same point as you. I definitely think independent tax advise is a good idea, anyone know if you can hire a tax consultant on an hourly rate to have a chat about it? I think the easiest thing to do at the moment is to ring the revenue as suggested by my work mate and WaterSprite and see what they say


Independent advise or confirmation IN WRITING from revenue is the way to go. Under no circumstances get telephone confirmation and then proceed based solely on this.



d3481553 said:


> My (2 bed)apartment is outside Dublin and would fetch 600-650 p/m, so I assume the rent-a-room scheme would cover half of that, so I would still need to pay at least 300 per month + half the bills


Why would you be paying half the bills if you are using none of the utilitities? Maybe half the standing charge for your ESB (and half the line rental for telephone if you have one) is fair but not one penny of the bill itself for the time you are away.

Edit: it's no what the rent a room scheme will cover-it's what the MARKET RATE for a SINGLE room will cover. You cannot legally charge your tenant over the rate for a room to push the rent up to the rent a room limit as this would indeed be tax evasion (pretending to rent a room when in fact the tenant is renting the house-otherwise the tenant wouldn't pay over the odds for the 'room').


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## d3481553 (16 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*



murphaph said:


> Edit: it's no what the rent a room scheme will cover-it's what the MARKET RATE for a SINGLE room will cover. You cannot legally charge your tenant over the rate for a room to push the rent up to the rent a room limit as this would indeed be tax evasion (pretending to rent a room when in fact the tenant is renting the house-otherwise the tenant wouldn't pay over the odds for the 'room').



Yes, I was just having a stab in the dark, I've no idea what the rent-a-room rate would be, so I would have to check assuming this was even a viable option, but Im inclined to think that renting the apartment is the way to go; just hand everything over to a management company to look after while I enjoy a beer on a beach on a Thai island


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## murphaph (16 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*



d3481553 said:


> Yes, I was just having a stab in the dark, I've no idea what the rent-a-room rate would be, so I would have to check assuming this was even a viable option, but Im inclined to think that renting the apartment is the way to go; just hand everything over to a management company to look after while I enjoy a beer on a beach on a Thai island


Have a read through the threads about letting agents on the site first ;-)

Always best to manage the property directly and failing that by a close family member you can trust. Much better for someone to actually go around every month to collect the rent and keep an eye on your place if at all possible.

Problems can mount up and your letting agent may not even know and if the do may not pass the information on to you promptly.


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## d3481553 (16 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*

Unfortunately, I think Ill have to go with management from a letting agency as my family live in Dublin, and I doubt they like me enough to drive down once a month 

I've only been going by price in checking out letting agents , I never really considered who would give the better service, I just assumed they all do pretty much the same thing. Probably important to consider now that you've mentioned it. Tough to know which are better than others, Ill have to check out the threads on here as you've suggested.


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## Afuera (17 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*

Wow, that is some reception you received for your first post here d3481553. It seems that the quality of posters on this forum has really gone downhill since all the best ones were either banned or got fed up having their responses edited/deleted.



murphaph said:


> it's no what the rent a room scheme will cover-it's what the MARKET RATE for a SINGLE room will cover. You cannot legally charge your tenant over the rate for a room to push the rent up to the rent a room limit as this would indeed be tax evasion (pretending to rent a room when in fact the tenant is renting the house-otherwise the tenant wouldn't pay over the odds for the 'room').



I think there is a slight mix up here. The rent a room scheme falls under a licensing agreement and is outside the remit of the Residential Tenancy Act. Therefore there are no such restrictions that market rate be charged or even that the tenancy be registered with the PRTB.

As murphaph pointed out, there is a limitation on how much can be taken in under the rent a room scheme before tax will be charged. I think it currently stands at 10,000 per annum. You will need to declare the income to Revenue at the end of the tax year even though it is not taxable.

Definitely talk to an expert, but I think your original suggestion is perfectly legal. You could find a lodger willing to pay 600p/m, go away for 6 months to enjoy the Thai beaches, and when you return ask the licensee to leave and you would not have broken any of the rules regarding the scheme.


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## Setanta12 (17 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*

As one who had to argue the meaning of the phrase 'principal private residence' with the Revenue, I suggest people break it down into their constituent parts 'principal' (i.e. you can have a few residences), 'private' (as in, not a public residence) and 'residence' itself (where you 'reside').

Its this latter word which causes difficulty. In the end, I ended up using CAT case-law to support my CGT position (or was it the other way around?) I argued successfully that a holiday cottage and not a presbytery was a priest's residence. In another case, in arguing the meaning of the word 'reside', I ended up arguing what constitutes a 'continous occupation', the Revenue argued an unbroken uninterrupted line of occupation, I argued that this militated against long holidays.  

These matters are never as straight-forward as sometimes suggested on this website. But to my mind, the absence from the country for a year (even if termed a holiday) could hardly be deemed to be such (i.e. a holiday), however six-months could easily be termed a holiday.


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## Gypsy (17 Jun 2009)

I have a similar question to the guy who started this thread.I have had a house built on an adjacent site.I own my PPR for over 20 years.Can I move into the new house for a extended period to get a feel if I want to live there permenantly.Before selling my PPR. If I do can I still qualify for the Rent a Room scheme if a family member is still there with one or two rooms rented.Do I have to be actually living there even if I am not outside the country.?Also what is the max that can be earned under the Rent a Room Scheme without being liable for tax.


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## murphaph (17 Jun 2009)

*Re: Own appartment for just short of 2years. Going travelling :Rent-a-room Scheme?*



Afuera said:


> Wow, that is some reception you received for your first post here d3481553. It seems that the quality of posters on this forum has really gone downhill since all the best ones were either banned or got fed up having their responses edited/deleted.
> 
> 
> 
> ...


My point was this:
If the apartment is worth 600pm and a room is worth 300pm then to charge 600pm (even with the tenant's blessing) to a lodger to give him the full enjoyment of the house would be tax evasion as it is not your PPR once you let someone else have the peaceable enjoyment of the property. If you 'nudge nudge wink wink' to the tenant that you'll (for example) charge him 550 per month for the whole house but that legally he is a licensee rather than a tenant (to which he agrees for the 50 per month reduction) then that is clearly tax evasion.

The only way (IMO) to do this legally is to genuinely take in a lodger at the going rate for the room and then go on holidays while keeping your own room free for your own use at any time. Taking in a tenant for the whole house and labelling him a lodger (who is happy to pay twice the going rate for a room) is clearly tax evasion.

Independent advice required for sure but it seems the OP is heading down the road of waiting it out and letting the whole house. OP: If you are travelling the world presumably you will have no other income anyway and you should be paying no tax as your rental income (after allowances like mortgage interest/insurance/wear and tear/managemant fees) will be so small it'll likely be well under the taxable threshold!


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## d3481553 (23 Jun 2009)

Thanks for your input Afuera/Setanta12, the last 10 or 15 posts is the kind of intelligent debate I was originally trying to generate.

@Gypsy
Unfortunately, Im not educated enough on this subject to answer intelligently on that one, hopefully one of the other guys might be able to answer your question. I would honestly only be guessing.

@murphaph
I actually only realised this morning about the tax credits building up over the time that Im not working, so that gave me a nice warm feeling! I was worried about coming back from holidays to a tax bill for thousands of euro.

Just on the allowance, is mortgage interest not only tax deductable against section 23 properties? How do I find out the capital/interest/TRS breakdown of my mortage repayments? Ring the bank I suppose?

Also, on the CGT thing, does my apartment become an 'investment property' FOREVER when I rent it out? Because it will be my PPR once I get back from my travels and you don't pay CGT on your PPR. So does the status change again from investment property back to PPR?!! As an earlier poster said, if I did decide to sell it in the future it would be harsh to have to pay CGT on it.


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## murphaph (23 Jun 2009)

d3481553 said:


> Just on the allowance, is mortgage interest not only tax deductable against section 23 properties?


No. All Investment properties currently qualify for this allowance. You can now deduct only 75% of your mortgage interest payments (or from the end of this month, can't remember the exact date from which the budget reduced it from 100% to 75%).



d3481553 said:


> How do I find out the capital/interest/TRS breakdown of my mortage repayments? Ring the bank I suppose?


Yup. You will have to instruct revenue to cease TRS from the date you start letting it out of course as TRS is an owner occupier relief. Revenue will then contact your bank and instruct them to cease the relief to you. The bank will be able to provide a statement for any date you need so you can work out how much interest you've paid during your year away.



d3481553 said:


> Also, on the CGT thing, does my apartment become an 'investment property' FOREVER when I rent it out?


No.



d3481553 said:


> Because it will be my PPR once I get back from my travels and you don't pay CGT on your PPR. So does the status change again from investment property back to PPR?!!


Yes.



d3481553 said:


> As an earlier poster said, if I did decide to sell it in the future it would be harsh to have to pay CGT on it.


You may have to pay a proportion of CGT due if the property is ever sold with a capital appreciation. You would not be liable for the full amount due as if the property had always been an investment property, only that proportion due to the period of time it was. You may well have no worries on this score as prices are still heading south anyway and I presume you paid more for your place than it's currently worth given the timeline. Again, an independent tax advisor will be able to clarify.


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## d3481553 (23 Jun 2009)

Excellent, thanks v.much for the info murphaph

I knew about having to cease the TRS alright, but the mortgage interest being tax deductable is a real eye opener, I reckon your right; by the time I allow for everything tax deductable, I dont think theres going to be any taxable profit, due to the monthly rent being so low.


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