Am I allowed rent against interest on my PPR?

I bought 2 investment properties in Tipp a couple of years ago and then purchased my main residence in Dublin 2003. I purchased the main Dublin residence on an investment loan (bank gave 80%) and I came up with 20% plus 9% stamp duty. The reason I purchased it with an investment loan was that I didnt need to take out life cover (as is required by the bank when buying your home loan) which was prohibitively expensive due to my medical history. I keep a room there myself and as I bought it with an investment loan I am renting out 3 rooms (rental income: 1500 euro/mth) & writing off the rental income against the interest on the loan. I know I am allowed to do this but as it is my Principle Primary Residence will I have to pay capital gains tax on it if i eventually sell?

dm101,

I hate to be the bearer of bad news, but it is irrelevant what the bank calls your mortgage, investment or whatever, as far as revenue would be concerned.

A mortgage for your principle private residence would not be considered to be a mortgage for an investment property(in the eyes of revenue) and therefore you can't offset the mortgage interest against the rental income.

You are entitled to tax relief on the mortgage as it is for your principle private residence and this is normally done at source by the bank. You are allowed an income of around €7,000 rental income(tax free) through the rent a room scheme, but I'm not sure what happens if your income exceeds that. Others may be able to advise.

I'm not an expert, but I'd be confident that my understanding is correct.

If you are above the rent-a-room allowance threshold then the interest on your house will be split (usually) on a bedroom basis and a portion will be allowed as a deduction against the rental income

e.g. 4 bedroom house with you occupying 1 and paying tenants the other 3
25% of interest on mortgage ould qualify for TRS as owner occupier, 75% (if over the r-a-r threshold) will be deductible against the rental income received

The house when sold will be treated on the same basis for CGT
1/4 of profit exempt as PPR and 3/4 of profit taxable as an investment gain

stuart@buyingtolet.ie

DM101,

Apologies for my last post. Stuart is correct, I checked with a buddy of mine in revenue.

Donking