Offsetting tax against mortgage interest

L

landlord

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I have quite a few rental properties and I was considering leaving one vacant for two years.
That property still has an interest only mortgage on it. Am I correct in saying I can still offset the rental profit from the OTHER rental properties against the mortgage on the property that will not be rented? Thanks.
 
Your question makes very little sense as worded.

I presume your question is this.

Can I set the interest on a mortgage on property on which I get no income against the rent from other properties?

I don't know if "No" is still the answer or not, but that is your question.

Brendan
 
landlord said:
I have quite a few rental properties and I was considering leaving one vacant for two years.
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Presumably the rental property in question is residential and is in the State (i.e. there is a requirement to register a tenancy (if any) with the RTB).

With multiple properties, you calculate a net Case V assessment across all properties as per the example below:

Property A (Vacant)Property B (Not vacant)Property C (Not vacant)
Rent€0€20,000€20,000
Deductible Expenses:
Mortgage Interest€0 (See note 1)€10,000€10,000
Case V Profit / Loss€0€10,000€10,000

Net Case V Assessment for Tax = €20,000

Note 1:
Mortgage interest for Property A is not a deductible expense for tax and there is no Case V loss available against Case V profit of other properties as there is no tenancy registered with the RTB. There is also no Case V loss on Property A available to reduce Case V profit in future years.

Per Paragraph 1 of this Revenue Guidance:

"Entitlement to a deduction for interest paid on borrowed money employed in the purchase, improvement or repair of a rented residential property is provided for in section 97(2)(e) Taxes Consolidation Act 1997 (TCA). The deduction is conditional on compliance with the registration requirements of the Residential Tenancies Act 2004 (the 2004 Act) in respect of all tenancies which exist in relation to the property in the year of assessment or accounting period in question."
 
Wow!

Because it's not registered then they can't claim the mortgage interest.

I presume that they can't carry the mortgage interest forward against future rental income either?

Brendan
 
Brendan Burgess said:
Wow!

Because it's not registered then they can't claim the mortgage interest.
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That's not the reason. You simply can't claim a deduction for any cost incurred in relation to a property which has not been made available for renting, against taxable rental income received on other properties. This applies regardless of the nature of the rental property involved, for example if 2 commerical units are mortgaged but only one is rented in a given period.

This state of affairs long pre-dated the mortgage interest restriction contingent on compliance with the Residential Tenancies Act and in any event leaving a property empty does not in any manner contravene the Residential Tenancies Act.
Brendan Burgess said:
I presume that they can't carry the mortgage interest forward against future rental income either?
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Correct.
 
But if I have three properties available for rental and can't find a tenant for one of them, does the loss not reduce my Case V income?

Or if I make a loss on one property as in the following example, can I set that loss against the profit in Property D?


Property A (Vacant)		Property B (Not vacant)Property C (Not vacant)Property D
Rent€0€10,000€20,000
Deductible Expenses:
Mortgage Interest€0 (See note 1)€15,000€10,000
Case V Profit / Loss€0(€5,000) €10,000
 
Brendan Burgess said:
But if I have three properties available for rental and can't find a tenant for one of them, does the loss not reduce my Case V income?
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In the case of residential properties, such a scenario can only be regarded as either hypothetical or bogus for the foreseeable future, Brendan.
 
Last edited:
Am I right in saying that a void period during the tax year does not eliminate the tax relief available for mortgage interest for that void?


E.g. property rented / registered Jan to June, vacant from July to Dec.
Rental income 20k

Mortgage interest Jan to Dec, 10k

The full year of mortgage interest can be offset against the rental income received.

Do I have that right?
 
As is so often the case with tax, it depends.

What is the reason for the void, and when was it let again?
 
This may not be authoritative or exhaustive but might be relevant.
ipoa.ie

Expenses Landlords Can Claim - Irish Property Owners' Association

What expenses can a Landlord claim? There are a lot of expenses that Landlords can claim in order to reduce your tax liability. Many Landlords are unsure of their obligations and entitlements, meaning Landlords often don't claim back what they are entitled to......
ipoa.ie ipoa.ie
Expenditure between lettings:

Allowable expenditure incurred in the period between the termination of one lease and the granting of another lease by the same landlord is deductible provided the landlord was not in occupation of the premises during that period.
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DannyBoyD said:
Scenario above is by way of a question, not a case study.
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It’s a fair question from @torblednam

When I was a landlord I did the following:

In mid-2018 I had a void of about six weeks in between lettings and in that period I actively sought tenants. I claimed relief on full mortgage interest for the year.

In 2022 I moved back into the house for simplicity we’ll say at end-August and claimed relief on exactly 2/3 of the mortgage interest paid in 2022.

I would imagine you can’t claim relief in between lettings if you allow your cousin to live in it rent-free while they do a summer job.
 
Sorry for the confusion…..One of my residential rental properties I have decided to not rent it out for 2 years to then allow me to re-rent it at market rent. A 2 year void. So I guess I can’t offset the mortgage interest of this specific property against the rental profit from the others. Ok thanks McGibney.
That will probably change my plan.
 
DannyBoyD said:
As is mine!

Is there a list of 'acceptable' reasons for voids?
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There is rarely if ever any list of anything "acceptable" as far as Revenue are concerned and when there is they are apt to change it at the drop of a hat, sometimes with retrospective effect as happened a number of times in the past decade over what was allowable and non-allowable for R&D credit claims.

Basically it's caveat emptor and hope for the best.
 
I would say a common-sense test for a void period is as to whether you are actively seeking tenants or renovating it with a view to seek tenants.

Leaving it empty for two years to reset the RPZ rules would be neither of these things.
 
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