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Letting house to My Dad

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  • 23-11-2010 10:36pm
    #1
    Fondu
    Registered Users Posts: 76 ✭✭


    Ok lets say i own house x.My dad and I live in house x.Can i charge rent that would be transfered into my bank account on a monthly basis..My dad is ok with this but i want to have in in my bank account rather than in cash if you know what i mean.


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    #2
    FoxT
    Closed Accounts Posts: 4,204 ✭✭✭FoxT


    you might be able to do this under the rent-a-room scheme. This allows you to receive rent up to a max of eu10k pa, tax free.

    Details are here:

    http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/rent_a_room_scheme.html


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    #3
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    I cant do this as he is a relative of mine..


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    #4
    silja
    Registered Users Posts: 2,921 ✭✭✭silja


    Fondu wrote: »
    I cant do this as he is a relative of mine..

    But isn't that what you asked, if you could do that with a relative? Or is your question whether you need to pay tax on rental income from a relative (yes you do)?


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    #5
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    All im wondering is if it legally ok to let the house i live in as well out to my dad and yes i am willing to pay tax on it


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    #6
    Kristopherus
    Registered Users Posts: 11,907 ✭✭✭✭Kristopherus


    Why do I smell a big dead rat here:confused:


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    #7
    Victor
    Registered Users Posts: 78,388 ✭✭✭✭Victor


    So, you want to charge your father rent and have it transferred to your bank account and you are happy to pay tax. I don't see any particular problem.

    You may be able to save yourself the tax by structuring it as a household arrangement, depending on the amount of course - you can't charge your father 600 a month for groceries and utilities.

    Letting the whole house to your father is rather peculiar if you live there.

    If you are up to shenanigans, we can't help you though and any contrived mechanism is likely to be seen through by a third party, who may look at the effect, not the mechanism.


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    #8
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    I was thinking of more along the lines of 450 a month,and no not the whole house,just half the cost of a average home.I was to declare it as extra income and was just wondering is this ok since he is a family member. With the rent relief thing i thought the y might see this in the same light


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    #9
    CCCP
    Closed Accounts Posts: 219 ✭✭CCCP


    Fondu wrote: »
    Ok lets say i own house x.My dad and I live in house x.Can i charge rent that would be transfered into my bank account on a monthly basis..My dad is ok with this but i want to have in in my bank account rather than in cash if you know what i mean.

    Did your father charge you rent when he was raising you??


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    #10
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    Withall due respect,you do not know the full story.Id just like to see if this is ok


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


    FoxT wrote: »
    you might be able to do this under the rent-a-room scheme. This allows you to receive rent up to a max of eu10k pa, tax free.

    Details are here:

    http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/rent_a_room_scheme.html


    just to correct the above statement. It is not allowance of rent up to a max of 10k. Its reciept of income, that includes income for bills, food etc

    its unlikely somebody would break the threshold but its important to make the distinction because at €10000.01 everything becomes taxable and not the that over the 10k limit


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    #12
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    OP as I understand it you cannot use rent a room renting to a son or daughter but I dont see any provision although probably implies that says you cannot use rent a room for your father.

    Honestly best thing you can do is contact the revenue and ask them.


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    #13
    Calibos
    Registered Users Posts: 7,807 ✭✭✭Calibos


    Reading between the lines here, it looks like the OP needs to inflate a 'Statement of earnings' figure for some reason. ie. normally it would be in everyones interest bar the taxman for son to pay dad 'rent' in cash or in this particular case dad to pay son 'rent' in cash. Even if this was declared and no one was trying to keep the Taxman out of the loop, surely cash in hand would still be preferable. Why the need for the transactions to go through a bank account? Hence why I think OP needs his earnings figure to be inflated. Either that or OP doesn't trust his oul fella to pay except via Direct Debit? :D

    Or am I just a cynical bollix? :D


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    #14
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    lol I do trust my Dad to pay it.You see in a few years time i would like to get a mortgage.If the bank sees im getting regular amounts into the bank thats im saving, they might be a bit more forgiving on giving out a loan.


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


    Fondu wrote: »
    lol I do trust my Dad to pay it.You see in a few years time i would like to get a mortgage.If the bank sees im getting regular amounts into the bank thats im saving, they might be a bit more forgiving on giving out a loan.

    am I missing something here ....

    If your renting out then you already have a mortgage ? Or you have a house that can be used as collateral against a mortgage.

    So a few things. If you talking about buying a second property Id have a serious think about it in the current climate.

    Secondly banks no longer give a crap about rental income. The days of this being used to calculate somebodies income have been and gone.

    Ultimately your not going to end up in a better position as a result of this.


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    #16
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    I have no mortgage on the current house.I was planning on using my current house as part collateral for a mortgage.

    I have a decent amount of money in my bank accounts.
    Do you think the bank would not accept a round figure of say 100k loan for 7 or 8 years if i could pay back a figure of around 2k per month


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    #17
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Fondu wrote: »
    I have no mortgage on the current house.I was planning on using my current house as part collateral for a mortgage.

    I have a decent amount of money in my bank accounts.
    Do you think the bank would not accept a round figure of say 100k loan for 7 or 8 years if i could pay back a figure of around 2k per month


    a couple of things

    1. A lot of banks for reasons unbeknown to me have a min mortgage drawdawn. Generally around the 150k mark.

    As stupid as this is it means you may have a problem getting a mortgage of 100k and might have to get a loan. That has 2 major issues. Firstly the term your looking at would be very short for the loan and secondly the interest rate would be highly punitive.

    If your looking at such a quick turn around why bother ? The likeyhood is you could buy in cash in 4 years time (going by the numbers in your last post). House prices in 4 years time are unlikely to be much more if at all than they are now.

    Doing some quick math your much better to hang on and buy for cash.
    Surely it makes better financial sense


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    #18
    The_Morrigan
    Registered Users Posts: 9,368 ✭✭✭The_Morrigan


    OP go and talk to your bank with regards to the mortgage - they are the only ones who can advise you correctly in relation to this as procedures and product offerings have been overhauled in the last year or so.

    As for the renting thing, if your father is living with you, does it have to consitute rent? could it not be just shared living expenses/contribution towards the household etc. I know when I was living with my parents I forked out a couple of hundred a month towards the house, food, bills etc.


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    #19
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    The_Morrigan wrote: »
    OP go and talk to your bank with regards to the mortgage - they are the only ones who can advise you correctly in relation to this as procedures and product offerings have been overhauled in the last year or so.

    As for the renting thing, if your father is living with you, does it have to consitute rent? could it not be just shared living expenses/contribution towards the household etc. I know when I was living with my parents I forked out a couple of hundred a month towards the house, food, bills etc.

    The whole point of my dad renting is so that the banks can see it and it adds more money to my balance for a loan in the future.The 2k figure would include rental income from the new house.
    So i would have 3 different amounts going into one bank account every month that i could hold
    I would use only rent income to pay for the house ie
    Rent:400+800+(new rent:800) = 2000
    Figures above include some maintenance fees as well

    Are you saying as well that i cant get a mortgage as well because the amount isnt large enough..Wow what a joke if this is true..


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    #20
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    Wait and buy in cash in a few years time. Houses will be cheaper still than they are now despite what everyone seems to be saying to the contrary.


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    #21
    The_Morrigan
    Registered Users Posts: 9,368 ✭✭✭The_Morrigan


    Fondu wrote: »
    The whole point of my dad renting is so that the banks can see it and it adds more money to my balance for a loan in the future.The 2k figure would include rental income from the new house.
    So i would have 3 different amounts going into one bank account every month that i could hold
    I would use only rent income to pay for the house ie
    Rent:400+800+(new rent:800) = 2000
    Figures above include some maintenance fees as well

    Are you saying as well that i cant get a mortgage as well because the amount isnt large enough..Wow what a joke if this is true..




    Proof of income with regards the banks will be from your P60, tax documents etc.. the months of bank statements are to estimate your outgoings and subsequently your disposable income.
    The banks will not consider rental income now, previously they only considered 25% of it.


    EDIT: Actually, I re-read that, are you going to be buying to rent? That is a whole different ball game, and the banks have a whole different set of rules and regulations when it comes to that.
    I think previous you could only get a loan to value of about 70% if you were not buying as your principle residence, but to rent it out as a business..again this is something you need to talk to the bank about.


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    #22
    tomcollins97
    Closed Accounts Posts: 951 ✭✭✭tomcollins97


    Sound to me like the OP is accepting rent from his Dad so his Dad can claim rent allowence - which for a single person is 380/month. Nice earner from both of them...


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    #23
    Fondu
    Registered Users Posts: 76 ✭✭Fondu


    tomcollins97 wrote: »
    Sound to me like the OP is accepting rent from his Dad so his Dad can claim rent allowence - which for a single person is 380/month. Nice earner from both of them...

    Nope,that is not my intention.Again this is all in relation to getting more funds for a house and also showing the bank i will save.


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