Becoming a landlord

jenna4

hey,the time has come for me to move home and rent out my house, stupid recession so just wondering if anyone has any experience in becoming a landlord in Ireland. Is it best to go through a letting agency? if not why ... and also if I'll hafta pay tax on the rent, thanks in advance

D3PO

jenna4 wrote: »

hey,the time has come for me to move home and rent out my house, stupid recession so just wondering if anyone has any experience in becoming a landlord in Ireland. Is it best to go through a letting agency? if not why ... and also if I'll hafta pay tax on the rent, thanks in advance

1. I wouldnt recommend a letting agency for a few reasons. You dont get to properly vet your tennants your relying on them. Unless your moving to another part of the country its a waste of money to pay somebody to do this. You also are unawar eof any difficulties or problems that are going on, read this forum the amount of issues tennants have with letting agents is amazing.

2. You have to pay tax of course, that said you cant write off a lot of things against the tax, mortgage interest, refurbishment expenses etc.

3. Remember you will no longer be entitled to TRS and need to make sure this is sorted.

4. Make sure you have a lease signed for any tennancies and make sure you get a months security deposit aswell

5. Make sure you register the tennancy with thePRTB www.prtb.ie this is to protect you and the tennant in the case of a dispute.

6. Best of luck

bop1977

Also if the house is lees than 2 years old there may be stamp duty due if you didnt pay any when you first bought the property.

D3PO

oh also if you bought on the affordable housing scheme then you cannot rent out the house you must live there

jenna4

thanks for that info, seems like without the trs and payin tax im gonna end up payin the equivilant to the mortgage so will hafta re-think things, thanks

anbrutog

I'll be in the same situation soon ( moving in with the gf ) and I'll have to rent my place out. By the sounds of things I may be taking a fairly big hit to do so. Wasn't counting on losing my TRS. In terms of tax , if I expect the rent I'll receive to be around 700euro, how will it be done??

D3PO

jenna4 wrote: »

thanks for that info, seems like without the trs and payin tax im gonna end up payin the equivilant to the mortgage so will hafta re-think things, thanks

sounds like in your circumstances the rent a room scheme might be a better option for you ?

That allows you recieve €8000 (i think its 8k too lazy to check) in gross rent before having to pay tax.

jenna4

at this stage in my life i'd prefere not to rent a room to anyone as i like my own space and would rather rent the whole house out than live with a stranger, thousands of people rent out houses every year, surely its not costing them that much?

D3PO

jenna4 wrote: »

at this stage in my life i'd prefere not to rent a room to anyone as i like my own space and would rather rent the whole house out than live with a stranger, thousands of people rent out houses every year, surely its not costing them that much?

the question is how many of them are actually tax compliant, how many of them have instruted revenue & their bank to cease their TRS payments etc

Kipperhell

jenna4 wrote: »

at this stage in my life i'd prefere not to rent a room to anyone as i like my own space and would rather rent the whole house out than live with a stranger, thousands of people rent out houses every year, surely its not costing them that much?

Their mortgages may be for less or finished. If you bought at the higher end of of property prices you have a larger cost. Some people evade tax but this has huge risk especially if the tenant finds out. Really not clever to do it. Renting a room may simply make the most financial sense. If you rent the tenant may simply stop paying rent and there isn't much you can do legally while you lose money. A shared house tenant situation is a lot easier to deal with. I think I would prefer to share than move in with parents at any stage I got to. You would not believe the damage a tenant will do through simple disregard in a rented house.

5Aces

TRS?

J-blk

5Aces wrote: »

TRS?

Tax Relief at Source (TRS):

http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html

godtabh

D3PO wrote: »

3. Remember you will no longer be entitled to TRS and need to make sure this is sorted.

Any more info on this?

D3PO

kearnsr wrote: »

Any more info on this?

What is a Qualifying Loan for TRS?
A qualifying loan for the purpose of mortgage TRS is a secured loan, used to purchase, repair, develop or improve your sole or main residence, situated in the State. With effect from 1st May 2009 the number of tax years in respect of which mortgage interest relief may be claimed is 7 years for first time and non first time buyers. You can claim mortgage tax relief in respect of the interest charged/paid on your main residence

if your not living there your not entitled to TRS, and if the revenue find out your gonna face hefty fines.

I have an Investment property. Can I claim TRS on this property?
No. Mortgage TRS only applies to a loan, which is in respect of your principal private residence. You should not complete a TRS1P form for an Investment property. Mortgage relief for rental properties is available through the tax system and you should contact your local tax office. If the property you have is an investment property and you are receiving mortgage TRS you should advise Revenue immediately using a TRS 4 form (PDF, 38KB) or by contacting the Revenue TRS Helpline 1890 46 36 26.


http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html#section2

toshsat

I will be in similar situtation soon and i have to rent out my apartment,i was thinking along the lines of rent allowance as i have a niece that wants to move in asap,
i work full time and im paying the lower tax rate on my wage,
Will this impact my wage?
If so how bad?

odds_on

If you are going to rent out do be aware that you may not get your property back in the same lovely condition that it is now.

You must also take into account that your tenants may not pay the rent as and when required.

Although you can make a claim against the tenant for rent arrears, damage and replacements in excess of normal wear and tear, this can be very time consuming and stressful - especially if you are relying on the rent to pay part of the mortgage.

You must also be fully aware of your obligations as a landlord and the obligations and rights of the tenants. Failure to adhere to the correct procedures and formalities, to the letter, could see you paying thousands in damages to the tenants. Ignorance of the law relating to residential lettings is no excuse and the law comes down very heavily of landlords who make errors, albeit in innocence.

RATM

D3PO wrote: »

oh also if you bought on the affordable housing scheme then you cannot rent out the house you must live there

Although thats exactly what the rules say some councils are overlooking it- I'm renting an apartment which is affordable housing; my landlady had to emigrate to Canada. She told me the council got on to her (a guy showed up at the door and asked where she was, I never knew it was affordable housing till then). Anyway she told them that if she couldn't rent it out then she would have no choice but to default on her mortgage and that they could chase her in Canada or elsewhere if they wished. They thought twice when they realised not letting her rent it out was going to be a bad decision in the long term.

The council is Fingal btw, others might be taking a more stricter view.

The Idyll Race

I advise the OP to sell if at all possible, and not to go down the LL route unless forced to do so for financial reasons, such as the the mortgage value being greater than the selling price.

The pitfalls in the business are many and are not always obvious.

1. Rubbish collection or the lack of it. Although it is their responsilbiity to arrange for the disposal of their own rubbish, in most cases over the last seven years I have had to clean out festering, putrid rubbish, nappies and all, from neglected bins because tenants haven't paid waste disposal charges.

2. Absconding using the deposit as an excuse.

3. Managing agents not checking for references.

4. Management agent fees that eat up the deposit.

5. Government/IMF only allowing 75% of the interest charge on the mortgage as a tax deductable expense.

6. Management companies effectively controlled by the builder of the development and being screwed for a thousand a year.

8. In the UK, council tax is levied on residents irrespective of ownership status. Here, the property owner is screwed and tenants get away scot-free.

Once the value of my property outstrips the mortgage I'm out of this, the only reason why I rented out was that my ex-fiancee didn't want to live there and I became a full time live in carer for my parents. I'm not a professional landlord, don't want to be, but I have spunked more money on this bloody property than if I had a cocaine habit, and with none of the pleasure.

murphaph

jenna4 wrote: »

thanks for that info, seems like without the trs and payin tax im gonna end up payin the equivilant to the mortgage so will hafta re-think things, thanks

You can deduct 75% of mortgage interest wrt a let property (so much more than TRS (30% I think) allows ).

As for tax, yes you'll have to pay it but there are still quite a few write offs available to you when calculating your net taxable profit. If your mortgage is still quite young, the interest portion of your repayment will be quite large and as this is 75% deductible, it could reduce your taxable income dramatically.

You need to sit down and do some sums and read the revenue guide to rental income first and foremost.

odds_on

The Idyll Race wrote: »

I advise the OP to sell if at all possible, and not to go down the LL route unless forced to do so for financial reasons, such as the the mortgage value being greater than the selling price.

The pitfalls in the business are many and are not always obvious.

1. Rubbish collection or the lack of it. Although it is their responsilbiity to arrange for the disposal of their own rubbish, in most cases over the last seven years I have had to clean out festering, putrid rubbish, nappies and all, from neglected bins because tenants haven't paid waste disposal charges.

2. Absconding using the deposit as an excuse.

3. Managing agents not checking for references.

4. Management agent fees that eat up the deposit.

5. Government/IMF only allowing 75% of the interest charge on the mortgage as a tax deductable expense.

6. Management companies effectively controlled by the builder of the development and being screwed for a thousand a year.

8. In the UK, council tax is levied on residents irrespective of ownership status. Here, the property owner is screwed and tenants get away scot-free.

Once the value of my property outstrips the mortgage I'm out of this, the only reason why I rented out was that my ex-fiancee didn't want to live there and I became a full time live in carer for my parents. I'm not a professional landlord, don't want to be, but I have spunked more money on this bloody property than if I had a cocaine habit, and with none of the pleasure.

You and many like you who find that they have to rent out their homes, may not be "professional" landlords. However, as you are renting out, you will be considered as a professional and should know ALL the laws as regards renting. The RTA 2004 is the main law nowadays but how many landlords have actually read the RTA 2004, AND understood it. Some parts are fairly plain but others are very difficult to understand.

Any landlord should download from the PRTB website, all the relevant sample notices (some with notes on completion) and understand them.

For anyone thinking about renting out their home, it is NOT an easy option.