Declaring Rent

S

SNOOP101

Registered User
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26
Hi,

I bought a house last year but moved in with my girlfriend who had already bought her house, very soon after. I am looking to rent it out now and declare my income to the revenue people. Would this affect my status as a FTB ? and to qualify for Mortgage Interest Relief ?
 
If you bought as an owner occupier and now want to rent the property out (within 5 years of purchase) then you would be liable for a clawback of stamp duty - basically the difference between what you paid (possibly nothing) and what an investor would have paid on the same purchase.

You have lost your FTB status by buying this property as far as FTB SD exemptions go. However you may still qualify for FTB rates of mortgage interest relief on another PPR - I'm not sure. You cannot claim mortgage interest relief on a non PPR property. You can however offset interest on any loan(s) used to purchase it against rental income.

If you rent the property out then you must register with the PRTB and deal with the tax issues that arise. See this FAQ:

Property Investment FAQ

Rental income less allowable expenses will be assessable for income tax. Having rented the property out some portion of any eventual resale gain will be assessable for CGT.

If in doubt get independent, professional advice on the investment and taxation aspects of this issue.
 
ClubMan said:
However you may still qualify for FTB rates of mortgage interest relief on another PPR - I'm not sure.
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The FTB status for TRS lasts for 7 years from the date of the first purchase. According to previous posts it may be transferred to any property where a mortgage is being paid and is a PPR.

The Revenue documents on this aren't 100% clear (where a trade up or change of property are involved), but previous posters have confirmed this and I'd tend to trust them on it (I believe Ccovich may have confirmed this through his recent experience, but I also thought one of the threads confirming this was from you CM?? Could be wrong on either or both counts).
 
Thanks Clubman

I paid 242k for the house, so am I right in thinking that if I do rent the house, I won't have to pay the stamp duty on it, and I can still claim the FTB Mort Int Rel ?
 
SNOOP101 said:
I paid 242k for the house, so am I right in thinking that if I do rent the house, I won't have to pay the stamp duty on it
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No - how do you reckon that? you would be liable for 4% or €9,680 assuming that you paid no SD on the original purchase.
and I can still claim the FTB Mort Int Rel ?
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Not on the original property because you would no longer be an owner occupier. You could offset interest on any loan(s) used to purchase the property against rental income though. You can claim FTB mortgage interest relief against any mortgage that you are named on for another PPR though as far as I know.
 
SNOOP101 said:
I paid 242k for the house, so am I right in thinking that if I do rent the house, I won't have to pay the stamp duty on it, and I can still claim the FTB Mort Int Rel ?
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You will pay the stamp duty on it, you'll be paying as an investor not as a FTB so SD is due (as detailed by CM above).

FTB TRS is only available on a PPR, so again as advised by CM, you will not be able to claim it on the original property.
 
Also, you'll need to register with the PRTB in order to be able to offset your rental income against mortgage interest.
 
ClubMan said:
Well I did mention the PRTB issue earlier! :)
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Apologies, *pats CM on the head*, that was hours ago and the 'aul memory just ain't what it used to be, Fridays always seem to have that effect. Do take heed of the advice given by CM and Howitzer, non registration will leed to serious problems if identified down the line.

For the OP, while property rental can be a good investment, be sure to understand all the issues involved. A lot of legal implications for rental and potentially high tax implications. If you don't understand them then the penalties and fines which may result can also be extremely high. Most the information you need is available directly from the Revenue homepage, www.revenue.ie, additional info can be found at Oasis or even here on AAM.
 
SNOOP101 said:
Think I need to talk to a tax advisor !
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I fully agree this is an excellent idea.

I would suggest that for maximium benefit you do as much research as you can in advance. If you sit down for a metting and don't understand the terms he's throwing at you, it could be a tad overwhelming. You'd also get more benefit if you knew the basics and could concentrate on some of the more complicated/important issues.
 
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