Mortgaged Homeowner moving to rented property

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rayd

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Advice for mortgaged homeowner looking rent primary residence and move to other rented accommodation

I currently have a mortgaged property and with a growing family we need to move to a bigger place. I have never rented or been a landlord before so all advice welcome.

I initially thought it would be as simple as renting my home and that would cover the mortgage and then simple rent another place. However from my initial research it seems a lot more complicated.

I discovered that I would loose my TRS. Is there any way to get tax relief as a new renter in 2013 and if I move back to PPR will TRS be re-activated?

As a landlord I know I have to file year-end account. However I don’t want to be in situation where to the revenue it looks like I made profit as any money that comes in is covering the mortgage. Does that make sense?

For example if I took in €12k in rent and have deductions of €8k based on what I can list as deduction, do I need to pay tax on the remaining €4k?

Can I not just let the 2 rents cancel each other out?


At a top level I would like to rent out our property for example €1300 p/m and rent a new place for €1300p/m and after 12 months when filing returns as a landlord the profit is ZERO. As in reality there is no profit as its all going back out on rent.
 
The money you pay in rent yourself has no bearing on the rental property as far as the Revenue is concerned. You can only count 75% of the mortgage interest cost for income tax purposes too.

Full details on http://www.revenue.ie/en/tax/it/leaflets/it70.html
I'd suggest you stop by http://www.irishlandlord.com/forum/ too and have a read of some of the stuff there. Being a Landlord can be both the easiest and hardest job you'll ever do all at the same time.
 
The plan as you outline it won't work from a taxation point of view and you would need the permission of the bank to rent it-and they will probably seek a higher interest rate for a Rental property. As pointed out, lots of good information on revenue.ie. Yoi give no information on whether you have equity in the property. If you have, or even if you don't, can't you look to trade up to a more suitable house?
 
We are currently in negative equity, like most people. I spoke to KBC and they said there is no change to our rates if we want to rent (some good news).

They also said they will be bringing out negative equity mortgages package in the coming weeks/months. I guess until this happens there is no viable option to trade up as this would be a much better option than renting.
 
I wish KBC were that understanding with me, when I moved out of my apt and rented it my interest rate changed within 1 month and I lost my TRS.
I had to battle with KBC for 2 months about the interest rate as I was not making money but actually had to pay more out for the house I was now renting in the end I went to the financial ombudsman and they said that they would freeze my current rate as if it was my primary residance for 14 months and then switch it to an investment property rate !
 
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