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Rent Relief Questions

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  • 13-01-2010 11:13pm
    #1
    Zascar
    Moderators, Motoring & Transport Moderators, Music Moderators Posts: 12,778 Mod ✭✭✭✭


    I was just filling out my rent relief form and about to send it off for the rental property I have been living in for the last year. I noticed some text about if you have a mortgage and are claiming mortgage interest relief. I do have a mortgage for an property I have - I have never lived in it, it has been rented out all of this time - and I do get mortgage interest relief on it.

    I'm wondering what this means and if I should still send this form in? AM I still entitled to something, or not? My apartment is rented out, I have never paid any tax on it as I don't make any profit on it, it costs me a small amount each month. I'm just wondering if I do sent this in might it throw a spanner in the works or something.

    Also, for the 5+ years previous to this, I have always lived in accommodation but I have never claimed any rent relief on any of them. The reason being is that the property has always belonged to a friend or mine, or a friends dad etc. Since I was not sure what their tax situation was, I did not want to highlight them unnecessarily. Is this really the case? Or can you still claim (without their pps number) - has anyone done this, how exactly does it work?

    Advice appreciated
    Thanks


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    #2
    Senna
    Registered Users Posts: 8,800 ✭✭✭Senna


    Are you claiming or have you ever claimed Mortgage interest relief on the apartment?
    Since you never lived there i'll guess you haven't, but you would still need to phone revenue and ask them.


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    #3
    maria gstones
    Closed Accounts Posts: 34 ✭maria gstones


    If you bought an apartment/house, ie have a mortgage, and you have never lived in it, it is seen as an investment property. I thought you could not get Mortgage Interest relief on an investment property. If it was your first purchase, you would have benefitted from reduced stamp duty also. Irrelevant of whether you are making a profit from this or not you are supposed to submit returns to revenue as it is an income. It is likely that as far as revenue is concerned, they think you are living in the place you have a mortgage on!
    If you claim rent relief which you are intitled to do, you will lose your mortgage interest relief, and you may have to pay it back for the time you are back dating the rent relief. you will also have to sort out your tax owed on the apartment you have been renting and you may owe claw back of stamp duty. that is what you should do, or continue as you are, run the risk of having to pay it all sometime and do without the rent relief.
    another way you could get saught out is if your tenants claim their rent relief on the property revenue think you are living in! However you can get up to €10000 rent tax free as part of the rent a room scheme so if what you receive is less than that there should be no worries there. I would not however ask your tenants not to claim the rent relief if they ever ask, they are entitiled to it where you are abiding by the law or not!


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    #4
    The Minstrel
    Registered Users Posts: 386 ✭✭The Minstrel


    maria gstones wrote: »
    If you bought an apartment/house, ie have a mortgage, and you have never lived in it, it is seen as an investment property. I thought you could not get Mortgage Interest relief on an investment property. If it was your first purchase, you would have benefitted from reduced stamp duty also.

    What about if you are struggling to afford your mortgage and need to rent out your apartment, thereby forcing you to rent cheaper accommodation. Such a property could hardly be considered an investment property, could it? Would your Mortgage Interest Relief be stopped in that event? Would it be possible to claim Rent Relief?
    you can get up to €10000 rent tax free as part of the rent a room scheme so if what you receive is less than that there should be no worries there.

    Is this just for the rent-a-room scheme? If one is in negative equity and unemployed, is there any tax relief?

    http://www.revenue.ie/en/tax/it/leaf...st-relief.html

    "Section 2: What is a Qualifying Mortgage?

    A qualifying mortgage for the purpose of interest relief is a secured loan, used to purchase, repair, develop or improve your sole or main residence, situated in the State. You can claim tax relief in respect of the interest paid on this loan or mortgage."


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    #5
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    The Minstrel wrote: »
    What about if you are struggling to afford your mortgage and need to rent out your apartment, thereby forcing you to rent cheaper accommodation. Such a property could hardly be considered an investment property, could it? Would your Mortgage Interest Relief be stopped in that event? Would it be possible to claim Rent Relief?



    Is this just for the rent-a-room scheme? If one is in negative equity and unemployed, is there any tax relief?

    http://www.revenue.ie/en/tax/it/leaf...st-relief.html

    "Section 2: What is a Qualifying Mortgage?

    A qualifying mortgage for the purpose of interest relief is a secured loan, used to purchase, repair, develop or improve your sole or main residence, situated in the State. You can claim tax relief in respect of the interest paid on this loan or mortgage."

    if you dont live there its an investment property. There are no exceptions.

    Your not entitled to TRS as a result, you must sent in tax returns regardless of weather there is any lability or not (as you can only write off 75% of interest theres likely to be tax owed anyway)

    there are also potential stamp duty implications

    if as you suggest somebody is struggling to pay their mortgage then they should rent a room or 2. Otherwise they pay their dues

    OP are you paying NPPR ? You realise you have to pay that even if you own 1 property if your not living in it.


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    #6
    The Minstrel
    Registered Users Posts: 386 ✭✭The Minstrel


    D3PO wrote: »

    there are also potential stamp duty implications

    Can you outline these implications? I paid stamp duty when I bought my house.
    if as you suggest somebody is struggling to pay their mortgage then they should rent a room or 2. Otherwise they pay their dues

    I have a 2 bed place, and I am indeed renting out a room. I'm just trying to to figure out some kind of sustainable plan to stop myself from defaulting on my mortgage.


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    #7
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    The Minstrel wrote: »
    Can you outline these implications? I paid stamp duty when I bought my house.



    .

    Was it stamp duty as an FTB ?

    How long after buying did you start to rent out, and when i say rent out i mean the whole house not rent a room.


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    #8
    The Minstrel
    Registered Users Posts: 386 ✭✭The Minstrel


    D3PO wrote: »
    Was it stamp duty as an FTB ?

    How long after buying did you start to rent out, and when i say rent out i mean the whole house not rent a room.

    Yes it was stamp duty as a FTB, before FTB stamp duty was eradicated.

    I have been living in it the whole time, renting out the other room. My dilemma is that I am considering moving out of it in an effort to maintain the mortgage.


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    #9
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    next question then is when did you buy ? month and year would help :)


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    #10
    The Minstrel
    Registered Users Posts: 386 ✭✭The Minstrel


    mid 2004


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    #11
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    The Minstrel wrote: »
    mid 2004


    good news for you so. Clawback only occurs if rented out within 5 years of purchase so as of mid 2009 your all clear :)


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    #12
    Uriel.
    Registered Users Posts: 8,061 ✭✭✭Uriel.


    D3PO wrote: »
    good news for you so. Clawback only occurs if rented out within 5 years of purchase so as of mid 2009 your all clear :)

    This has been reduced to 2 years now.


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    #13
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Uriel. wrote: »
    This has been reduced to 2 years now.

    cool didnt realise that. either way hes clear :)


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    #14
    [Deleted User]
    Posts: 23,339 ✭✭✭✭ [Deleted User]


    Zascar wrote: »
    I was just filling out my rent relief form and about to send it off for the rental property I have been living in for the last year. I noticed some text about if you have a mortgage and are claiming mortgage interest relief. I do have a mortgage for an property I have - I have never lived in it, it has been rented out all of this time - and I do get mortgage interest relief on it.

    .................... My apartment is rented out, I have never paid any tax on it as I don't make any profit on it, it costs me a small amount each month. I'm just wondering if I do sent this in might it throw a spanner in the works or something.

    Loads of issues here :(
    - you say you don't pay tax on the rental income as you don't make a profit, have you submitted annual returns to verify this ? The entire mortgage payment is not a deductable expense from the rental income, only the interest is.
    - you are not entitled to mortgage interest relief credits as it is not your home.
    - presumably you are not registered with the PRTB.

    Regarding the clawback on stampduty, I don't know much about that but that may be more bad news for you.


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    #15
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    RoverJames wrote: »
    The entire mortgage payment is not a deductable expense from the rental income, only the interest is.


    Only 75% of the interest is deductable


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    #16
    Zascar
    Moderators, Motoring & Transport Moderators, Music Moderators Posts: 12,778 Mod ✭✭✭✭Zascar


    Hey guys, thanks for the input. I'm not going to claim for any rent relief as I'm not entitled to it. I'm going to do things properly from here on in now. The property has been empty for the last 5 months, costing me a fortune :( but as soon as I get someone into it now I'm going to register with the PRTB, pay the tax, and then next year I can claim my rent relief for this year...


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    #17
    [Deleted User]
    Posts: 23,339 ✭✭✭✭ [Deleted User]


    D3PO wrote: »
    Only 75% of the interest is deductable

    Cheers, worse again for the OP so.


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    #18
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Zascar wrote: »
    Hey guys, thanks for the input. I'm not going to claim for any rent relief as I'm not entitled to it. I'm going to do things properly from here on in now. The property has been empty for the last 5 months, costing me a fortune :( but as soon as I get someone into it now I'm going to register with the PRTB, pay the tax, and then next year I can claim my rent relief for this year...

    your unlikely to owe any tax if you have 5 months unoccupancy.

    its not a case of oweing but stupidly you have to do a tax return even if you owe nothing. stupid but hey what do you expect in this country


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    #19
    Zascar
    Moderators, Motoring & Transport Moderators, Music Moderators Posts: 12,778 Mod ✭✭✭✭Zascar


    Cheers. Ok so if I am to do this proeprly, can anyone point me to a website or something which explains all the responsibilities of a landlord / investment property owner? Need to know what I need to apy, who i need to register with and what returns I have to fill in?
    Cheers


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    #20
    3DataModem
    Registered Users Posts: 3,994 ✭✭✭3DataModem


    Zascar wrote: »
    I do have a mortgage for an property I have - I have never lived in it, it has been rented out all of this time - and I do get mortgage interest relief on it.

    As you have rented it all this time, you are liable for Investment Property stamp Duty.

    This is backdated to the date you first took any rental income, so if that is 2004 you may be charged interest and penalties.

    You are also liable for income tax on the rent but that may be zero as the mortgage is higher than the rent.

    You have not been entitled to mortgage interest relief as you have not been living there. You will eventually have to pay this back, and you may be charged interest and penalties.

    You are however entitled to rent relief on your current place. Go ahead and apply for it.

    I STRONGLY advise you get a tax advisor to sort the above out for you... if you approach the revenue before they catch you you can save a LOT of hassle and a lot of interest and penalties.


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    #21
    3DataModem
    Registered Users Posts: 3,994 ✭✭✭3DataModem


    D3PO wrote: »
    cool didnt realise that. either way hes clear :)

    No he said he's never lived in it and it's been rented "all this time".


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    #22
    3DataModem
    Registered Users Posts: 3,994 ✭✭✭3DataModem


    Zascar wrote: »
    I'm not going to claim for any rent relief as I'm not entitled to it.

    You ARE entitled to it if you are renting your home, irrespective of other properties / rental income / loans.


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    #23
    wench
    Registered Users Posts: 1,644 ✭✭✭wench


    3DataModem wrote: »
    You are also liable for income tax on the rent but that may be zero as the mortgage is higher than the rent.

    The mortgage interest is only an allowable expense if you're PRTB registered, which I expect the OP wasn't. Therefore he will likely have few expenses to offset against the income, and will potentially have a quite large liability outstanding.


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