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LBT

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hi,

I'm thinking of going travelling next year for 6 months I was thinking of renting out my house for that period but I'm just wondering when I come back will I be still entitiled to my TRS? Also in relation to tax, I imagine I wouldn't have to pay any tax on the rental income due to the fact that I wouldn't actually be working in the country so my tax credits should cover it....or am I completely wrong!
 
How long have you owned the property. If less than 5 years you will be liable to clawback of stamp duty from the day you receive the first rental. This could be substantial especially if you bought the property as a new build.
In relation to tax you have to complete a Profit/Loss on rental income. See [broken link removed]
You can't claim the interest against the rental income until you register with the PRTB.
At the end of the tax year all income is added together including profit from rental income and you are then taxed, your credits are then deducted.
 
asdfg said:
How long have you owned the property. If less than 5 years you will be liable to clawback of stamp duty from the day you receive the first rental. This could be substantial especially if you bought the property as a new build.
In relation to tax you have to complete a Profit/Loss on rental income. See [broken link removed]
You can't claim the interest against the rental income until you register with the PRTB.
At the end of the tax year all income is added together including profit from rental income and you are then taxed, your credits are then deducted.
Click to expand...

I have the house a year and a half the house was under the stamp duty threashold when I bought it so I shouldn't have to pay any stamp duty...
 
I have the house a year and a half the house was under the stamp duty threashold when I bought it so I shouldn't have to pay any stamp duty...
Click to expand...

Unless the house was less than 127K you will be liable to clawback of stamp duty at the full rate. see below If for example you bought for 300K you will be liable for stamp duty clawback @ 5% or 15K

from revenue site
Aggregate Consideration...........First Time Buyer..........Full Rate
Up to €127,000...........................Exempt........................Exempt
€127,000 - 190,500.....................Exempt...........................3%
€190,501 - 254,000.....................Exempt...........................4%
€254,001 - 317,500.....................Exempt.......................... 5%
€317,501 - 381,000.................... 3%.................................6%
€381,001 - 635,000.....................6%................................7.5%
Over €635,000............................9%.................................9%
 
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asdfg said:
Unless the house was less than 127K you will be liable to clawback of stamp duty at the full rate. see below If for example you bought for 300K you will be liable for stamp duty clawback @ 5% or 15K

from revenue site
Aggregate Consideration...........First Time Buyer..........Full Rate
Up to €127,000...........................Exempt........................Exempt
€127,000 - 190,500.....................Exempt...........................3%
€190,501 - 254,000.....................Exempt...........................4%
€254,001 - 317,500.....................Exempt.......................... 5%
€317,501 - 381,000.................... 3%.................................6%
€381,001 - 635,000.....................6%................................7.5%
Over €635,000............................9%.................................9%
Click to expand...
I bought the house for 270k I was a first time buyer so I would have to pay 13.5k. that is a joke I only plan to rent it out for 6 months and I am coming back to live in it. It really doesn't make me want to declare that I am leaving for 6 months!
 
Thems the rules as they say.

The SD clawback only becomes an issue when you let the property. You can leave the property and not let it out which would probably be the best option. If you do decide to let the property and not pay SD and revenue find out they will apply penalties and interest to your SD bill. They could find out if for example one of your tenants applies for rent relief. I'm sure there are many more ways that revenue could find out.
 
It's not a joke - it's to stop people exploiting the (FTB) owner occupier preferential rates of SD when they are actually planning to become investors within the first 5 years. If you can retain your PPR status while travelling for the 6 months (you may need professional advice on whether or not this is possible) and you collect less than €7,620 in rental income then you may be able to avail of the owner occupier [broken link removed] with no income tax, CGT or SD clawback liabilities. If you cannot retain your PPR status while away then you need to understand the tax implications. Note also that if you cease (even temporarily) being an owner occupier then you cannot legitimately claim owner occupier mortgage interest relief on your mortgage but you can offset interest against rental income. As for not declaring tax liabilities where they arise just because you don't like the rules - evading tax is not really acceptable and is not that prudent anyway so don't do it and don't look for advice on doing it here.
 
ClubMan said:
If you can retain your PPR status while travelling for the 6 months (you may need professional advice on whether or not this is possible) and you collect less than €7,620 in rental income then you may be able to avail of the owner occupier [broken link removed] with no income tax, CGT or SD clawback liabilities.
Click to expand...

and you must keep your own room to avail of the rent a room scheme (i.e. you can't let out all the rooms in your house as it could then no longer be your PPR)
 
LBT said:
hi,

I'm thinking of going travelling next year for 6 months I was thinking of renting out my house for that period but I'm just wondering when I come back will I be still entitiled to my TRS? Also in relation to tax, I imagine I wouldn't have to pay any tax on the rental income due to the fact that I wouldn't actually be working in the country so my tax credits should cover it....or am I completely wrong!
Click to expand...

I have left Ireland for a year and to avoid the clawback via renting out, my bank have given me a 6 month mortgage break. Could you not look into this? I am hoping to go interest only then for the remaining six months.
 
The key to avoiding clawback is not letting out the property. You could also try and save the expected mortgage repayments
 
I just want to clarfiy I want to do this right cause I'm the type of person who would definitely be caught if I didn't declare it!. It just annoying that if you do want to go travelling its not a great incentive. Looks like I will be asking the bank for a 6 month break!
 
Maven said:
I have left Ireland for a year and to avoid the clawback via renting out, my bank have given me a 6 month mortgage break. Could you not look into this? I am hoping to go interest only then for the remaining six months.
Click to expand...
Just to clarify this presumably avoided the need to rent out to cover mortgage repayments in the first place because taking a mortgage break doesn't otherwise exempt you from the SD clawback on renting the place out within 5 years of purchase.
 
asdfg said:
The key to avoiding clawback is not letting out the property. You could also try and save the expected mortgage repayments
Click to expand...

yeah that would be the thing to do alright but I dont think everyone is on a six figure salary and can afford to do that (save 6 months mortgage payments easily without having a life). In my case that would be close to 10K.

I do think there should be a option for young people who want to travel to be able to rent their place out and not be subject to clawback.

Anyway best of luck to the op in what he choses to do.
 
Maven said:
I do think there should be a option for young people who want to travel to be able to rent their place out and not be subject to clawback.
Click to expand...
There is - it's called the rent a room scheme but requires that the property owner retains their owner occupier status which is something that may be possible but which they may need professional advice on.
 
LBT said:
I just want to clarfiy I want to do this right cause I'm the type of person who would definitely be caught if I didn't declare it!. It just annoying that if you do want to go travelling its not a great incentive. Looks like I will be asking the bank for a 6 month break!
Click to expand...

asking the bank for a six month break will cost you extra interest. the real target of the SD clawback would be people who buy a property, claim ftb exemption and then a year or two later start letting it out in full as a long term property investment. the legislation would not be intended to target young people travelling for six months and renting out their spare rooms to pay the mortgage before they return.
imho if you keep your own room while away and thereby retain your PPR status, rent out other spare rooms within the limit of the rent-a-room scheme and return to your property after the 6 mths then you should be fine.
but this is just my view so get prof advice or talk to your tax office to be sure.
 
imho if you keep your own room while away and thereby retain your PPR status, rent out other spare rooms within the limit of the rent-a-room scheme and return to your property after the 6 mths then you should be fine.
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The key to the situation you propose is where is her PPR, as she is out of the country her house is not her PPR.

I am not a legal or tax expert so she would need to get professional advise on the whole matter incl the above questions before proceeding. If she were to get a get a payment holiday while away it may be the cheapest option in the long run.
 
asdfg said:
The key to the situation you propose is where is her PPR, as she is out of the country her house is not her PPR.
Click to expand...

it would still be her PPR is my point - as she keeps her room in her house, remains irish tax resident and is returning to it after her holiday it doesn't cease to be her PPR.
 
My point, and I could be wrong here, is that as she is not living in the house it can't be her PPR whether she is tax resident or not.

The OP would need to check this point when getting advise
 
Yes - this question of whether/when one can retain owner occupier status while abroad has been raised several times but I have yet to see a decisive answer in which case the only option would seem to be for each individual to get professional advice.
 
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