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Renting First House

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  • 30-06-2007 8:16pm
    #1
    S&k
    Closed Accounts Posts: 5 ✭


    Question,

    I have two properties , one with a mortgage, one without. I would like to rent out the property that has no mortgage, as it is the one that would get a much higher rental income and the one with a mortgage is much nicer anyway. (two different countys)

    My Question is in relation to Tax on the rental income, I know you can claim Maintenance , repairs , depriciation etc ... and Interest.

    But as i have no mortage on that property I dont pay interest.

    So Can I, Remortgage the property, Do it up a little, Pay off my other house that has a mortgage and then still be left with a property that is mine, and a property that I can claim interest relief on.

    I have it in the back of my mind that It is can not be done and would be better off selling the property buying a similar property with a morgage and claiming tax relief on that... silly I know but is it the case..

    Thanks for you imput..


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    #2
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    You can't claim interest relief on a rental property as far as I'm aware. However that wouldnt stop you from doing what you propose. It would be more tax efficent to put the mortgage on the rental property and allowing the rental income to pay down the mortgage.


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    #3
    S&k
    Closed Accounts Posts: 5 ✭S&k


    My main question is - can I remortgage and use the interest as a tax reduction. I dont think I can....

    I think that if this was possible, every one would just keep remortgaging their investment property so they could get the best benifits..

    thanks


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    #4
    SarahMc
    Closed Accounts Posts: 517 ✭✭✭SarahMc


    There is no problem with remortgaging your investment property. Remember if your home is mortgage free you can't claim TRS though, so you may be better off keeping a small mortgage on that.
    I have it in the back of my mind that It is can not be done and would be better off selling the property buying a similar property with a morgage and claiming tax relief on that... silly I know but is it the case..

    No no no, you would be caught for capital gains tax and stamp duty.


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    #5
    S&k
    Closed Accounts Posts: 5 ✭S&k


    Thanks, but now I am a little confussed... (easily I know)

    1. If we sell our first house (the one now with no mortgage) we dont have to pay CGT as its my (his) PPR as I live at the house and I work in the area, Our second house is where my girlfriend works and Lives. (has a mortgage on it)

    2 We purchased the 2nd house with the intention of me moving down there when my job suited, but it has not suited me to this date ( 3 years on ) (but they promised it will )

    3 So by right I can sell my first house with out paying CGT.. ( is this true ?) as I am just finally moving my family home.

    If i rent it out, I will be hit by a tax bill of €50K+ for CGT (due to its value increase) should I sell it after a while.( this is True .... :( )

    If I remortgage it ... use the money to pay off my Second house and then rent out first house so I can somehow recoup the 50K over 4 years or so and also claim interest as an expense and an expenditure...

    Also as my girlfriend is not working, she can claim the rental as income... can she still get the tax credits from that income and the associated threshold for the tax band ?

    So in a nutshell Should I sell or Should I rent it out ????

    Thanks for your advice


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