taxation/investment property

H

Haille

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I recently had a thread on the website in connection with re mortgage.I intend to purchase an investment property .I may remortgage my main residence worth 500,000 on which there is no mortgage.I would be looking for 100,000 euro.When I let out my investment property I can write off interest repayments against my rental income for tax purposes even though it is a remortgage. My question is can I claim for expenditure incurred in improving and maintaining my investment property or does it have to be my main residence when it is a re mortgage.
 
Haille said:
My question is can I claim for expenditure incurred in improving and maintaining my investment property or does it have to be my main residence when it is a re mortgage.
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You can offset interest on any loans used to purchase/renovate the investment property against rental income from that property. I'm not sure precisely what you mean by "claiming for expenditure" though.
 
If I refurbish investment property without getting a loan,buy carpets ,kitchen units and furniture for cash ,can I include this expenditure incurred by me in claiming tax relief against rental income.Was worried that the above items would have to be for my main residence the fact that it is a remortgage.
 
You could claim those things even if you had no mortgage so the sourse of the funds does not matter
 
Haille said:
If I refurbish investment property without getting a loan,buy carpets ,kitchen units and furniture for cash ,can I include this expenditure incurred by me in claiming tax relief against rental income.Was worried that the above items would have to be for my main residence the fact that it is a remortgage.
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Pre-letting expenses aren't directly tax deductible.

In my (non-expert) opinion, the best approach to take is to capitalise the refurbishment works (things like kitchen units, carpets, including costs of delivery and installation; likewise pre-letting repairs, initial decoration and so on) that are necessary to bring the property to good letting standard. This can be used to offset any CGT liability at a later stage, but must not be used as an offset against rental income. Future between-lettings redecoration, cleaning, and so on, are tax deductible from your rental income.

Furniture and appliances can be taken separately, and you can depreciate them at 12.5% of original value for eight years, deductible from gross rental income.

Regarding the securing of the mortgage investment loan, I think it's tidier to have an investment loan secured on the investment itself - you also won't be obliged to take out mortgage life assurance, as you will if you secure the loan on your PPR (although you may elect to do so). In either case, you may of course deduct any mortgage interest from your gross rental income for tax purposes.
 
hi there im buying an apartment in Budapest and the last payment is due in march 2008. Im raising the loan of €70000 on my ppr ( my main residence) i thought that if i borrowed this money and done repairs to my own residence that i could claim tax relief but that if i had an investment property like the one that im Buying in budapest that i wouldn't be able to claim it. Maybe someone could clarify this for me it seems really confusing to me as im hearing differant stories from differant people but then again i could be picking it up wrongly as there are terms maybe that i don't understand. I'd appreciate if someone could fill me in on what i should do in this case thank you.
 
You are investing in a foreign property without first getting independent, professional advice on the tax (and investment?) issues involved? Good luck!
 
i have got advice for the most part but i dont know all of it and im looking for some assistance in the things that i dont know it can be frustrating on one hand that in a few of the links here on this website say you cant claim interest relief on an investment property and then an accountant on the other hand says you cant whos right whos wrong thats what im trying to clarify
 
seánieboy said:
few of the links here on this website say you cant claim interest relief on an investment property and then an accountant on the other hand says you cant
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Aren't these saying the same thing?

What do you mean by "claim interest relief"?

You can offset interest on loans used to purchase/renovate an investment property against rental income from that property. I presume the same applies to a foreign investment property but you may well also have foreign tax liabilities.
 
some of the statements that i read maybe i dont fully understand but from what i did understand i thought that if you have a house in ireland and that if you were carrying out repairs or maybe an extention on youre ppr that you were able to claim interest relief at source with youre mortgage

but that if i was to buy an investment property on the strength of my principal residence and take out an equity release from it that i wouldn't be able to claim interest relief at source from this method would i be right in saying this

I know i have an alternative by taking out a mortgage in Hungary but the interest rates are too high so therefore im going down the equity release way here in ireland and yes i know i will have tax commitments in Hungary as they have a double taxation policy between our two countries.

when i was speaking to people in differant banks here in ireland i got the impression that i couldnt really claim interest relief if it was for an investment property but i could claim against the depreciation and everything else against the expences of youre property as if you had a property here in ireland as set out by the revenue commisioners here on leaflet it70
 
seánieboy said:
some of the statements that i read maybe i dont fully understand but from what i did understand i thought that if you have a house in ireland and that if you were carrying out repairs or maybe an extention on youre ppr that you were able to claim interest relief at source with youre mortgage
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Interest on loans used to purchase or renovate one's PPR qualify for owner occupier mortgage interest relief up to certain limits.
but that if i was to buy an investment property on the strength of my principal residence and take out an equity release from it that i wouldn't be able to claim interest relief at source from this method would i be right in saying this
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Yes - you cannot claim owner occupier mortgage interest relief on loans used for other purposes even if they are secured on your PPR. But you can still offset interest on such loans against rental income if the loans are used to purchase or renovate an investment property. In some cases some interest will qualify for owner occupier mortgage interest relief and some can be offset against rental income in which case you need to keep careful records on what's what.
when i was speaking to people in differant banks here in ireland i got the impression that i couldnt really claim interest relief if it was for an investment property but i could claim against the depreciation and everything else against the expences of youre property as if you had a property here in ireland as set out by the revenue commisioners here on leaflet it70
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If you have been depending on sales people for taxation advice relating to two jurisdictions then no wonder you are confused. You really need to get independent, professional advice in my opinion. You are asking very basic questions for somebody who is getting into foreign property investment.
 
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