Rental Property Question

Landlord1

Hi,

So my situation to brief everyone is.
I was a 1st time buyer of house, i rented it out within 2 months as i could not afford to live in it, due to job issue. I have had it over two years now without declaring the fact i rented it out. I was putting money to it each month to cover the mortgage so i was not making anything from it. I have a couple of questions now

1) Can i register now after 2 years to ensure everything is above board or will they look back over the first 2 years to see if i actually lived there or was renting it out when i was not supposed to

2) Is there anything else i would need to do now to get myself legit?

3) The person i had in the house was getting social welfare money to contribute toward the rent. Now his rent does not cover mortgage so i am still not making any money on it.

4) if i ever wanted to enter into the county council housing scheme where they take the house for 5 years will it just draw attention to me too much

5) i never made any tax returns, really because i didnt know how to. I presume i am getting relief at source but how can i check this?

I am just looking for answers to the q's and want to know what to do next.

Cheers for yer time guys.

anonymousjunkie

Did you live in it yourself and merely rent a room out or did you rent out the whole property?

Landlord1

I rent the whole property out.

anonymousjunkie

Ok, I'd guess the property was bought as a first time buyer and to be owner occupied which would mean you wouldn't incur stamp duty. However, check it out but I'm pretty sure that if this changes within the first 5 years of owning the property and its let out then you could be liable for stamp duty on the property.

1) Main problem with registering now would be the stamp duty issue above, you'd want to check it out. If revenue determined you were renting the house out for the last two years they would probably want their Tax Relief back, if you're claiming it.

2) Landlord needs to be registered with the PRTB and submit tax return each year.

5) TRS is lodged directly into the account from which your mortgage is paid from, description is something like Revenue Tax Credit.

Landlord1

Thanks for response.

I think that after 2 years you are now able to rent it out after being a FTB. So i felt that i was not in a position to do anything about it in the first 2 years and am looking at it now.

If no stamp duty is due on it now if i rent it, is there a chance that they could investigate the first 2 years?

I do not see any entry into my account like Revenue Tax Credit, would this be appearing if i did it at source or when? and should it be appearing monthly?

I would just like to get everything legit as much as i can although knowing what i did over the last two years was not right.

Thanks again.

20goto10

1) Not sure if its possible to back date a Form 11. They have a deadline, so there could be a penalty involved. Its no skin off their nose, you haven't been making a profit so you've only shafted yourself as any loss can be carried over to the next year. Maybe the best thing to do is just go legit from here on in.

2) You need to register with the PRTB. You cannot register for former tenancies. But you can register late for your current tenancy albeit at double the registration fee. This has no connection with the revenue, but they could integrate the systems in the future so better to make things match up.

3) When figuring out if you have made a profit you do not compare it to your whole mortgage but to the mortgage interest + expenses. As I've said, any loss gets carried over to the next year as an expense, so provided you do make a profit eventually, then you are never really making a loss...if that makes sense

4) I'd be very surprised if it sparks anything. They're really not that sophisticated and none of the systems are integrated. Get yourself legit from here on in and for your current tenancy and there is no reason why you would be flagged as suspicious.

5) You can sort out the TRS. There could be a penalty but I'd say that will be harsh. Its not every day they get someone offering money back The TRS helpline is 1890463626.

My advice is go legit for your current tenancy and treat it as your first. That is not legal advice, obviously

p.s You are liable for stamp duty if you rent out the property within the first 2 years.

Landlord1

1) ok so i take it a form 11 is for the landlord registry

2) 'You cannot register for former tenancies. But you can register late for your current tenancy albeit at double the registration fee' - so by registering as a landlord you pay a fee ye? if my current tennants are due to move out in April should i wait until then and say i lived in it until now and i am going to rent it out from then?? so one registration fee?

3) "mortgage interest + expenses" what expenses do you mean?

4) ok thanks.

5) TRS - can you explain why i would be paying them money? is this not something i receive, and i am not sure if i am receiving it.

thanks for your non legal advice and hopefully this will help someone else out too.

20goto10

Landlord1 wrote: »

Thanks for response.

I think that after 2 years you are now able to rent it out after being a FTB. So i felt that i was not in a position to do anything about it in the first 2 years and am looking at it now.

do you have tenants at the moment? When did they move in? If you're going legit it will need to be from a clean break tenancy wise. If their moving in date predates the 2 year mark you need to clear you from stamp duty clawback then you should consider changing the tenancy and going legit from then on. This is of course illegal I might add.

Landlord1 wrote: »

If no stamp duty is due on it now if i rent it, is there a chance that they could investigate the first 2 years?

All they can do is ask you the question. All depends on whether you want to divulge the correct information.

Landlord1 wrote: »

I do not see any entry into my account like Revenue Tax Credit, would this be appearing if i did it at source or when? and should it be appearing monthly?

It should be called TRS I think. It will be pretty obvious and a seperate deposit in your account each month. If its not there then you're not paying it.

Thanks again.[/quote]

3DataModem

1) Can i register now after 2 years to ensure everything is above board
YES.
(a) Register with PRTB.
(b) Start including this in your tax returns.
(c) Get your home insurance changed to landlords insurance.

or will they look back over the first 2 years to see if i actually lived there or was renting it out when i was not supposed to
(d) The Revenue might look into it. Especially if you bought another house within the two years.
(e) The PRTB won't care.
(f) The insurance company probably won't care.

2) Is there anything else i would need to do now to get myself legit?
(g) Yes. You owe additional stamp duty on the house. You owe what you would have paid as owner-nonoccupier (i.e. an investor) less what you actually paid in stamp duty (if anything).
(h) You probably owe the Revenue a refund of Mortgage Interest Relief. However they probably owe you additional mortgage interest relief, so not a big deal.

3) The person i had in the house was getting social welfare money to contribute toward the rent. Now his rent does not cover mortgage so i am still not making any money on it.
(i) Makes no difference. You won't owe income tax as Rent < Mortgage + Expenses. but you will owe stamp duty.

4) if i ever wanted to enter into the county council housing scheme where they take the house for 5 years will it just draw attention to me too much
(j) I have no idea.

5) i never made any tax returns, really because i didnt know how to. I presume i am getting relief at source but how can i check this?
(k) Check your last "statement of interest" from your bank (you probably got one in the last week or two)... it should say something about tax relief.



My STRONG advice;

> ONE: Call your home insurance company NOW. You have buildings insurance and contents insurance. Tell them you are renting the property. The cost will be a little more, but not too much more. If you don't do this you are taking a massive risk. If the bathroom leaks and damages the tenants TV you are liable. If the tenant slips on the water and breaks a leg you are liable. This is very very serious so make the call NOW.

> TWO: Start keeping reciepts for every tiny thing you spend on the house. Everything... screws nails lightbulbs, insurance, taxis to collect rent, bank fees, lease fees, service charge. Keep them in a big box. You'll need them for your tax returns.

> THREE: Do your 2008 and 2007 income tax returns ASAP. Download forms and guides from the web. They are long and confusing, but you only have to fill out one or two bits. You will need both P60's to do this.
You will be asked about rental income / expenses.
EXPENSES = cost of the mortgage interest for the year, plus the service charge, bills, lease costs, maintenance, insurance etc etc.
INCOME = rent. From what you say above income << expenses so you won't owe anything, but if you include in a return you can carry the loss forward to when you do start making a monthly profit!

Note; you don't need to prove the figs are correct unless they ask you, so don't worry if you are missing a receipt or two.

> FOUR: Now this is the tough one, and some posters may disagree with it.
Contact the revenue and tell them you have changed the use of the property from owner-occupier to residential investment.
You may owe them stamp duty... see details here;
http://www.revenue.ie/en/tax/stamp-duty/property.html#clawback

You may think you can get away with it, but I'd advise biting the bullet and fessing up. They are much more inclined to let you off interest and penalties if you initiate the contact. If they catch you (e.g. in 10 years, or when you sell the house, or get married, or retire, or start a business, or your tenant applies for rent relief) the interest and penalties are a lot higher.


If you want more info on this feel free to PM me. I've been in your situation before with TWO properties and have gotten everything sorted out.


In the meantime - call your insurance company NOW.

20goto10

Landlord1 wrote: »

3) "mortgage interest + expenses" what expenses do you mean?

You'll need to look that up. There is a big list of things that go down as expenses. Depreciation on yor furniture and fittings, Anything you have bought for the apartment, repairs and maintenance, advertising, mileage etc etc

Landlord1 wrote: »

5) TRS - can you explain why i would be paying them money? is this not something i receive, and i am not sure if i am receiving it.

Landlords cannot claim TRS, so you will have to refund this if you have been claiming it.

Landlord1

I apreciate all the info. I will have to sit down now and try and work it out..

I have not being claiming TRS as i thought it was not fair seen as i was not owner occupier.

I will get onto the insurance co too. I have had to do a good bit of work to the house due to leaks etc which i paid for myself and not from the insurance co.

thanks again and if ye think i need to know anything else just post away!