Second Time Buyer Interest Relief

[NNN]

I have claimed FTB mortgage interest relief on a property jointly owned with another first time buyer for one year. This house was sold and I have purchased (solely) an apt. Is it possible to claim the FTB rate of relief on the second property given only one year of the seven allowed was used?

 

[ClubMan]

As far as I know you can continue to claim FTB owner occupier mortgage interest relief for the rest of your 7 year FTB period. However you don't qualify as an FTB for other purposes (e.g. SD).

 

[NNN]

Thanks for that. Should I confirm with the Revenue that this is the case?

Secondly, the apt was puchased six months ago but has been rented out since ( I am not occupying it). Stamp duty was paid on the property. The mortgage on the property is not an investment mortgage. I have reigistered the tenancy with the PRTB, however have not yet submitted a return to the Revenue. I am claiming no interest relief at all at the moment.
I plan to move into the apt on expiration of the lease in June 07.

1) Were I to declare the rental income to the revenue ( bearing in mind I will have a tiny tax bill, if any, given the interest bill and offsettable expenses are more or less equal to the rental income I will have received), would this impact affect my ability to claim the FTB interest relief on the mortgage?
2) Are there any other tax issues to be considered.

 

[Dreamerb]

1) Were I to declare the rental income to the revenue ( bearing in mind I will have a tiny tax bill, if any, given the interest bill and offsettable expenses are more or less equal to the rental income I will have received), would this impact affect my ability to claim the FTB interest relief on the mortgage?
2) Are there any other tax issues to be considered.

Bear in mind that whether there is a tax liability or not, you must declare the income to Revenue. If you show your rent account and can prove satisfactorily that the offset is equal to or even exceeds the rent, then they won't assess you as having any liability - but you still have to declare it.

Likewise, assuming that you seek to claim FTB interest relief only from the date of commencing your own occupancy, there should be no problem, but you should formally advise Revenue of the change in status of the property to your PPR. While you can complete TRS1 online, in your case I'd suggest that you fill in the hard copy and submit with a cover note explaining. Or you could call them. They're surprisingly nice, you know!

 

[ClubMan]

Secondly, the apt was puchased six months ago but has been rented out since ( I am not occupying it).

I am claiming no interest relief at all at the moment.

But then you are not an owner occupier and don't qualify for owner occupier mortgage interest relief but you can offset mortgage interest against rental income.

1) Were I to declare the rental income to the revenue ( bearing in mind I will have a tiny tax bill, if any, given the interest bill and offsettable expenses are more or less equal to the rental income I will have received), would this impact affect my ability to claim the FTB interest relief on the mortgage?

You are not entitled to owner occupier mortgage interest relief.

2) Are there any other tax issues to be considered.

Have you checked the Property Investment FAQ? You should also get independent, professional advice in my opinion.

By the way - I've moved this query since it's a Property Investment and not strictly a Mortgages and Buying and Selling Homes query.

 

[NNN]

Just to clarify

The apt is the only property I own and was bought with the intention of living in it and not as a long term investment property. I realise I am not entitled to any owner occupier mortage relief at present and as you point out can offset my interest bill etc against rental income for the year it will be rented.

However I wish to move in when the lease expires in June. As an owner occupier at that point, having declared the income for the year of rental, and can I then pick up going forward on the FTB interest relief having used only one of the seven years allowable.(on first home, now sold)

Thanks

 

[Satanta]

(www.askaboutmoney.com/showthread.php?t=42930) This thread or especially (http://www.askaboutmoney.com/showpost.php?p=361799&postcount=64) this post may be of interest to you.

Confirmation of the 7 year period for FTB TRS, as pointed out by CM above (previously has been confirmed in other AAM threads, but nice to have an up to date confirmation).

You have 7 years from your first purchase to avail of the FTB TRS rate, I can't see any reason why this wouldn't be available to you within the 7 years on any PPR as an OO.

 

[ClubMan]

Stamp duty was paid on the property.

Did you pay the full investor rate of SD as required in this situation?

 

[NNN]

Bought in June 2006, stamp paid 14500 - 290,000 X 5%

 

[Dreamerb]

You should be fine, then. A cover letter to Revenue, and declare the rental income (unfortunately that's going to mean tax returns for each of 2006 and 2007 for what you believe may be no tax liability - minor hassle, but worth it because they will chase otherwise!), and you should be able to pick up your tax relief at source from when you move in.