New to Property Investment

[OnLooker]

Myself & my Brother purchased a house just over a year & a half ago. We intended to rent it out from the offset so we paid the stamp duty on the property. The property has been rented out for over a year now but we never registered the property with the PTRB or filed any rental accounts with the Revenue. We also registered for Mortgage Relief.

I have a few questions:

1. What kind of penalties would be incurred if we registered the property now & filed a rental account with Revenue or will there be any because by filing now, we are filing for the Year 2005.
2. Also, how does the rental income work when you have 2 people registered as the home owners?? One of these owners does not work!
3. Will the revenue look for the Mortgage Relief recieved over the rental term back?

Any answers to these questions would be most helpful.

 

[asdfg]

Afaik you can't claim interest relief until you have registered with the PTRB - I think this ruling came into effect last year.

What kind of penalties would be incurred if we registered the property now & filed a rental account with Revenue or will there be any because by filing now, we are filing for the Year 2005.

Since the property was rented during 2005, the return is due by Oct 31 2006 If submitted by the due date there should be no problem. After that interest accumulated on a daily basis.

Also, how does the rental income work when you have 2 people registered as the home owners? One of these owners does not work!

Revenue don't really mind who pays once they get paid. Submit the return and pay 50/50 assuming you own the house 50/50
How did the person that does not work get a mortgage. Did he have some sort of lump sum?
If only one took out a mortgage, then that person could only get interest relief on the rental income as this person will have to pay the mortgage from their share of the rental income. The other person then has the other share of the income from the rental. This needs to be clarified and can then do into greater detail.
Tax is payable on the profit at your marginal rate probably 44% 42% PAYE plus 2% Health Levy. The person on one income would probably pay no tax as his credits will probably be greater than the tax due.

Will the revenue look for the Mortgage Relief recieved over the rental term back?

You can make deductions from rental income to arrive at a profit /loss from rental income, the main one being the interest only paid on the mortgage.
See [broken link removed]. Look at example rental account in particular.
You can't also claim Tax relief at source if this is what you mean. You should contact revenue to sort out.

 

[ClubMan]

We also registered for Mortgage Relief.

Will the revenue look for the Mortgage Relief recieved over the rental term back?

Do you mean owner occupier mortgage interest tax relief ("TRS")? If so then as non owner occupiers you should not have been claiming that and need to repay any relief incorrectly claimed/obtained to date. Failure to deal with this issue is simply storing trouble up for later. See also this recent thread.

 

[ClubMan]

Afaik you can't claim interest relief until you have registered with the PTRB - I think this ruling came into effect last year.

The use of the term "interest relief" is confusing here. I presume what you mean is the ability to offset mortgage interest agaisnt rental income as an allowable expense? This is not the same as "interest relief" which is often used as a synonym for TRS.

 

[OnLooker]

The use of the term "interest relief" is confusing here. I presume what you mean is the ability to offset mortgage interest agaisnt rental income as an allowable expense? This is not the same as "interest relief" which is often used as a synonym for TRS.

The person was working but have since gone travelling around the world. It was a 50/50 split. Yes I was talking about TRS when referencing Interest Relief. I want to get it all cleared up so my accounts are in proper shape.

Another question, so the Rental Income from 2006 is due in Oct 2007?

Thanks for all your help!