Buying second house and still keeping the first house.

N

Nickolas

New Member
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4
Hi,

We are a young couple. We purchased our 1st home in 2020 ( we got the first time buyer scheme). We are now planning to buy a second house which is closer to my work place but will be staying in it only when I need to be around. While applying for the 2nd mortgage, the bank asked me what is the plan for my first house and I obviously said renting.
Looking backward now, since I took the First time buyer incentive, I'm not allow to rent.

My questions are
1. Can we own 2 houses without doing any business?
2. Can I rent a room in the second house which I'm purchasing. I will be staying in this house 9-10 days per months.
3. Will the bank chase me for not renting the property as a whole even if I have full capacity to repay both loan?


Thanking you in advance.
 
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moneymakeover said:
"Looking backward now, since I took the First time buyer incentive, I'm not allow to rent"
Click to expand...

I presume he got a tax refund on the Help to Buy Scheme

Can Revenue claw back a refund?​

Revenue can claw back refunds if you:

  • were not entitled to the refund
  • do not live in the property for a minimum of five years
 
Brendan Burgess said:
I presume he got a tax refund on the Help to Buy Scheme

Can Revenue claw back a refund?​

Revenue can claw back refunds if you:

  • were not entitled to the refund
  • do not live in the property for a minimum of five years
Click to expand...
Yes I got tax back for purchasing my first property.

If I am not planning to move in the 2nd property, do I still owe the revenue?

I will be staying in the second property temporarily for work purpose while my wife will be permanently staying in our First house. Am I allow to rent a room in the second accommodation?

Will the bank be after me for not renting my property although I am in a position to pay the full mortgage for both accommodation?
 

The only concern that Revenue will have is that you declare the income (and pay the tax arising, if any), on rent received from letting a room / rooms in the second house, since it would not be exempt income in circumstances where that house isn't your main residence.
 
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Thank you for the explanation.
Then in that case I am better off not doing any business ( rent a room) in the second house.

Is it an issue from revenue's people if my other family member lives in the house. My brother and his family is planning to move to Ireland to work as a doctor. My brother can give me the mortgage money as cash or transfer it to a bank account outside Ireland, while I am still paying the mortgage from my own bank account. Is it safe?
 
Just to note, if you have a mortgage on the second house, and with interest rates as high as they are currently, it's possible that you would have little or no taxable income, and tax liability.
 
Nickolas said:
My brother can give me the mortgage money as cash or transfer it to a bank account outside Ireland, while I am still paying the mortgage from my own bank account. Is it safe?
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It's a bit worrying that pretty much all of your suggestions so far involve some level of deceit. Any rent received (from your brother or anyone else) is fully taxable and needs to be declared.

Nickolas said:
1. Can we own 2 houses without doing any business?
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Yes of course you can. But you need to be clear with the bank what it is you are doing. You have obviously told them that it will be your PPR to get better interest rates but in reality it is a second/holiday home and the bank would treat this as a BTL mortgage.

Nickolas said:
2. Can I rent a room in the second house which I'm purchasing. I will be staying in this house 9-10 days per months.
Click to expand...
You cannot use the rent-a-room relief on your second property. The relief is only available on your PPR which is clearly the house your wife stays in.
However, you are fully entitled to rent rooms within that property as long as you understand that all rent received is fully taxable

Nickolas said:
3. Will the bank chase me for not renting the property as a whole even if I have full capacity to repay both loan?
Click to expand...
They won't be chasing anyone as long as you provide factual info when signing your loan offer.

Nickolas said:
Yes I got tax back for purchasing my first property.

If I am not planning to move in the 2nd property, do I still owe the revenue?
Click to expand...
As long as it remains your PPR then the clawback is not applicable. If you and your wife were to permanently move to the second property then the clawback kicks in.

You should proceed with caution and get some proper professional advice. Your situation will be a bit unusual if you go ahead with it. Retaining use of the second property will change things like how much of the mortgage interest and other expenses can be offset against rent received.
 
Thank you for the detailed explanation. I took notes of the points you made.
 
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