Becoming a landlord, advice needed?!

Smashee

Hiya, I was just wondering if ye could help me out? I'm going to be renting out my apartment to my niece ... I won't be making any profit on it and will have to contribute approx €200 to make-up the mortgage repayment. So, what I'm asking is:

1. Do I have to register, because it says something about not having to register if your tenant is a relative.
2. My niece will have RA, so it is possible to not register and she'd still be able to claim her RA?
3. If I do have to register what way is it taxed? I'm finding the info from the government doesn't really explain it in english!?!

If anyone can help me with any info it would be great! Thanks a million!

ethanb

hi smashee
been a landlord myself for a few year now(first let was to my brother) and yes you do have to register the property with the Private Residency Tenants Board at a cost of approx €70 per year/lease term, this board will protect your interests as a landord (ie eviction rights and procedures etc) as well as her rights as a tenant(very few until she can claim right to a long lease(excess 5years) a full list of procedures rights under the PRTB is available from its website and or any letting agent.
By the way i assume you have drawn up a lease agreement with your niece,? available from any good stationery shop, also have you got it bound by a solicitor, (not always done/necessary but worth it if there is any disputes further down the road that PRTB cannot deal with).
Technically speaking the tax office/revenue does not have co-operation between departments let alone differing agencies so technically she can claim rent allowance however if revenue do decide to spot check and your niece is the one you [U[are liable for the difference allowed.
regarding your tax liability not very much basically if the rent recieved is offset against the interest paid on your mortgage plus any legit expenses ie. replacement windows, carpets, blinds etc to a reasonable amount with proof of purchase .
Gov. office employees have a degree in double dutch so unless you graduated from that college too you will get no joy, basically i learnt as i went along with the help of a friendly accountant, which i would advise you to look into as can be taxed under the paye system if rent recieved is not substantial enough or alternativly you may be taxed or opt as being taxed as self employed for this purpose.

hope this was a little clearer. pm if you need anything else
good luck

The_Conductor

Smashee-

1) yes, you do have to register the tenancy with the PRTB. If the proposed tenant was a spouse, parent or child of yours, you would not have to register- a niece is not considered immediate family.

2) the manner in which your niece is paying is immaterial. Rent Allowance or other means are viewed equally as rental income by the Revenue Commissioners. It is entirely possible that at some stage the seperate data bases for Rent Allowance and tax could (and most probably will) be compared with each other. If you were found to be non-compliant the interest and penalties would be many many times more than your original tax demand might have been.

3) You have to register the tenancy with the PRTB. By rights you should have a lease drawn up- irrespective of whether its your niece who is renting the property or not (its defines your rights and her rights- and should there ever be a misunderstanding it would be in writing and easily defused).

As a seperate measure you will have file annual tax returns with the Revenue Commissioners. You will have a number of possible deductions- including a flat line deduction on furniture and fittings in the rented property over a 5 year period- which can all be offset against rental income before determination of your taxable income. ROS- the Revenue's online tax return thingy- is actually quite good at going through the ins and outs of the matter.

Point to note- I know you are saying that you're not making a profit out of the transaction- but letting a property is a defacto business. If you are letting your apartment to your niece at below market value- not only are you not making a profit on the transaction- but she in turn could be liable for gift tax on the difference between what she is paying and market value for similar properties being rented in the area.

Further- despite the fact that you are "not making a profit" on the transaction, as you put it- you do have rental income, and legally you are obliged to both register the tenancy and declare that income to the Revenue Commissioners. The fact that your outgoings exceed your rental income does not mean you do not have a tax liability- there are a number of factors which influence this.

Be careful for your own sake, and don't try to take shortcuts. Shortcuts have a nasty habit of coming back to haunt people!!!

Smashee

Thanks a million for your help ... oh and just in case you thought I was trying to skive outta the tax system I wasn't, I downloaded the form for the PRTB ages ago but I was going through the threshold website earlier and saw something which said you didn't need to register if your tenant was a relative so I thought I'd double check!

I think you're right ... I need to invest in a nice accountant just to point me in the right direction 'cos I'm not fully up to speed with procedures that go along with the whole landlord malarky! I did also download the info regarding claiming back any expenses on the property from the revenue website which was really helpful. Again, thanks for your replies, it was very much appreciated.

Ideo

i just know off hand that if the income from rent is equal to or €7620 then the amount is not taxable. not too sure what the requirements are in relation to being a loanlord though!

SerialComplaint

Ideo wrote: »

i just know off hand that if the income from rent is equal to or €7620 then the amount is not taxable.

This only applies to the rent-a-room scheme where the tenant is living with the landlord.

dumbyearbook

Ideo wrote: »

i just know off hand that if the income from rent is equal to or €7620 then the amount is not taxable. not too sure what the requirements are in relation to being a loanlord though!

Rent a room scheme went out the window in the last budget afaik.

information

Smashee wrote: »

I won't be making any profit on it and will have to contribute approx €200 to make-up the mortgage repayment.

Even if it is not covering your mortgage you could still be making a profit

SerialComplaint

dumbyearbook wrote: »

Rent a room scheme went out the window in the last budget afaik.

Not according to Citizens Information Board or Revenue Commissioners.

The_Conductor

SerialComplaint wrote:

Not according to Citizens Information Board or Revenue Commissioners.

Correct- there was further talk of removing it in the 2007 Finance Bill, but it was not addressed. In the context of the current estimates campaign, it is once again proposed to remove it, to offset the cost of increasing mortgage interest relief. A classic case of robbing Peter to pay Paul. No-one seems to be campaigning to leave the current scheme in place.

dumbyearbook

I stand correct i was'nt sure to be honest