Tax on family home question!

[NikkiT]

hi there, We have a 2 bedroom apartment (our main family home) that my partner and i live in with our two children. Basically it has been for sale for 2.5yrs now since I found out I was pregnant with our 2 daughter. Looks like we are stuck here for the forseeable. Problem is space wise we are very cramped and have no back garden etc and are on a first floor.
We are looking into renting it out but cant afford to buy anything as will have no deposit for a 2nd mortgage. Anyway what we are looking into is renting out apt and renting a house nearby. However my question is would we have to pay tax on this apt as a rental even if its the main family home (not an investment) and the reason for moving is overcrowding. Any advice would be appreciated.

Thanks a mill
Nikki

 

[Graham_07]

If you move from the apartment and rent it out then it ceases to be your principal private residence (PPR) from that date. It becomes an investment property. The reason for moving is unfortunately immaterial. You would be liable to return rent on the apartment. You would be allowed deductions for mortgage interest at 75% of interest paid since yesterdays budget ( property must be registred with the PRTB) and other expenses. You would not be entitled to TRS on a mortgage on that property from then on. If you sell the apartment and make a capital gain then some of that may be chargeable relating to the period rented as a proportion of period owned less the last 12 months ownership. You would be entitled to claim rent tax credit on the property you rent as your new PPR.