Tax and rental property

[Pianogirl]

I have a number of queries.

I bought an apartment in 2005 and lived there until 2013. In that year my husband and I bought a house together and moved. I kept the apartment and rented it out, however I did not declare the change of purpose (from residential to rental) to the mortgage lender. I was on a tracker rate so my mortgage interest was very low. I am a PAYE worker and I did declare my rental income on the Form 12.

In 2017 my husband and I separated and I returned to live with our child in the apartment. My husband stayed living in the house. We did not separate formally. However we have worked things out, and I am now considering moving back to the house with the child.

I have a few questions.

(A) If I keep the apartment and rent it out, am I obliged to inform my mortgage lender? If I don't, what are the potential consequences? Do the banks check in general? (I have always kept up payments etc)
(B) If I sell the apartment, I understand I will be liable for CG tax on the years I rented it out - is this correct? However, I can claim that this was my residence for the past three years, which is true and verifiable. If I sell the apartment is there a way the bank will find out I have paid interest on the mortgage as a primary residence and reclaim this in some way?


Thanks

 

[NoRegretsCoyote]

(A) If I keep the apartment and rent it out, am I obliged to inform my mortgage lender?

Check your contract. It is a common, but not universal clause. When I checked my own I found that this obligation didn't exist.

If I don't, what are the potential consequences? Do the banks check in general? (I have always kept up payments etc)

They do not actively check in my experience.

If you voluntarily tell your mortgage lender they will probably put you on a much higher rate (4%) which will really impact your ability to repay.

If you are paying your mortgage in full the bank will never bother you.

 

[Ravima]

silence is golden, as NoRegretsCoyote says. Best if anything happened in the future, to seek forgiveness rather than to ask permission. many banks during the reign of the Celtic Tiger gave tracker mortgages at the residential rates for investment properties.

 

[Pianogirl]

Check your contract. It is a common, but not universal clause. When I checked my own I found that this obligation didn't exist.




They do not actively check in my experience.

If you voluntarily tell your mortgage lender they will probably put you on a much higher rate (4%) which will really impact your ability to repay.

If you are paying your mortgage in full the bank will never bother you.

thanks for that - do Revenue link with the banks on this - eg if I get TRS?

 

[Pmarks78]

In my experience if you declare your rental income with revenue, Revenue will look for full repayment of trs for the years the property was rented.

 

[Bronte]

thanks for that - do Revenue link with the banks on this - eg if I get TRS?

No the banks don't. It's none of their business. Do you need to pay back TRS in addition to rental income tax and possible penalties and surchages. I'd say now would be a good time to sort out revenue as they are in a forgiving mood due to Covid.

Do not tell the bank you rented it out. Did you inform your insurance company that it was rented out?

 

[Ravima]

Ah, you shouldn't be getting TRS. You can't fool Revenue. You should be paying tax on any rental profits and you should not be getting TRS. As Bronte says, sort Revenue out now. By now, I mean now, not next month or next year!