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Rent House and keep Mortgage Interest Relief

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  • 28-07-2011 10:53am
    #1
    Johnfkm
    Registered Users Posts: 15 ✭


    Hi,

    I'm thinking of renting my house out and registereing with the PRTB.
    If so, will I automatically lose my Mortagage Interest Relief ?
    Will registering automatically trigger the releif to stop ?
    I bought in 2008 so I think I'm currenly getting 22.5% relief

    Thks


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    #2
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    You would be legally obliged to cancel your TRS but mortgage interest would be a deductible when calculating your tax returns.

    To rent your house you need
    • a BER certificate
    • to register the tenancy with the PRTB
    • to file annual tax returns


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    #3
    ronan45
    Registered Users Posts: 1,584 ✭✭✭ronan45


    One second didnt Enda Kenny Promise us the following?

    And I quote
    "We are offering a specific advantage of increased mortgage interest relief for 250,000 people, says Enda Kenny.

    Eh were waiting Enda thats why i Voted for you

    Anyone know whats going on or was this more lies for votes


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    #4
    helen1
    Registered Users Posts: 112 ✭✭helen1


    Not sure if anyone was listening to Eddie Hobbs on Newstalk last night. A guy rang in saying that he wanted to rent out the house he bought to help with mortgage payments. He had two questions
    Did he have to inform the bank as he was afraid that this would change the terms of the mortgage i.e. it would be viewed as investment property. Eddie said that he wouldn't bother and that as long as the money was been paid every month that they had more important things to look at.
    Secondly would he have to inform the revenue. Again Eddie said no that it would still be viewed as his principal private residence and so there would be no need to tell them.
    I may have missed something on this as i would have taught this was incorrect. The reason I ask was because i am in a similar position and I understood that I would need to declare the rental income to the revenue.


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    #5
    Johnfkm
    Registered Users Posts: 15 ✭Johnfkm


    Thanks for the quick replies.
    I don't mind filing tax returns as the rent will not be enough to cover the mortgage but if I lose my Mortgage Interest relief it will cost me almost an extra €500 pm..it's madness.
    If I don't inform Revenue as I'm supposed to will they automtically find out when I regsiter with the PRTB and remove the Mortgage Interst Relief ?
    Has anybody been down this path recenlty ?

    At this stage, i can't afford to lose my mortgage interest relief


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    #6
    quozl
    Registered Users Posts: 3,308 ✭✭✭quozl


    helen1 wrote: »
    Secondly would he have to inform the revenue. Again Eddie said no that it would still be viewed as his principal private residence and so there would be no need to tell them.
    That seems wrong to me also, but I am not a layer.

    I would double-check anything that Eddie Hobbs says though, TBH.


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    #7
    quozl
    Registered Users Posts: 3,308 ✭✭✭quozl


    Johnfkm wrote: »
    Thanks for the quick replies.
    I don't mind filing tax returns as the rent will not be enough to cover the mortgage but if I lose my Mortgage Interest relief it will cost me almost an extra €500 pm..it's madness.
    If I don't inform Revenue as I'm supposed to will they automtically find out when I regsiter with the PRTB and remove the Mortgage Interst Relief ?
    Has anybody been down this path recenlty ?

    At this stage, i can't afford to lose my mortgage interest relief

    I can't tell you if they'll automatically find out, but if they do find out, it is Tax fraud, so it would be a PITH for you then.


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    #8
    Treehouse72
    Registered Users Posts: 1,003 ✭✭✭Treehouse72


    helen1 wrote: »
    Secondly would he have to inform the revenue. Again Eddie said no that it would still be viewed as his principal private residence and so there would be no need to tell them.
    .



    That would be tax evasion. I find it impossible to believe Eddie Hobbes would advocate such a thing on national radio, so I suspect you heard wrong Helen.


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    #9
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Johnfkm wrote: »
    Thanks for the quick replies.
    I don't mind filing tax returns as the rent will not be enough to cover the mortgage but if I lose my Mortgage Interest relief it will cost me almost an extra €500 pm..it's madness.
    If I don't inform Revenue as I'm supposed to will they automtically find out when I regsiter with the PRTB and remove the Mortgage Interst Relief ?
    Has anybody been down this path recenlty ?

    At this stage, i can't afford to lose my mortgage interest relief

    1. You have to file a tax return declaring the rental income.
    2. You are not entitled to TRS on your mortgage
    3. Your lending institution would normally be expected to move you to an investment mortgage, as it is no longer your PPR (regardless of what Eddie Hobbs or anyone says- if you are not living in the property- it is *not* your PPR)
    4. Whether the rent is sufficient to cover your mortgage or not- has zero bearing on whether you owe tax on it
    5. You are allowed a number of deductions from the rental income prior to determination of taxable income- the current main deduction being mortgage interest- which is currently allowed at 75% (though the proposals are to phase this out by 2017).

    Yes- its not nice loosing your mortgage interest relief- however the 75% allowance of mortgage interest against your rental income- is a far more lucrative benefit than is the mortgage relief.

    Please get out of the notion that just because you're not covering your mortgage with the rent, that you're not making a profit, or do not have tax to pay (while you may not owe tax, its determined by other factors).


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    #10
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Treehouse72 wrote: »
    That would be tax evasion. I find it impossible to believe Eddie Hobbes would advocate such a thing on national radio, so I suspect you heard wrong Helen.

    If he actually said what Helen is suggesting he said, he deserves to be arrested and jailed. Don't know what the exact charge would be? Promotion of conspiracy to defraud perhaps?


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    #11
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    I heard the Eddie Hobbs thing...and thought it weird at the time.

    As for the FG promise, it has been postponed until there is money to pay for it. The new government got a short sharp shock when they got in and discovered FF had mislead them, and the people, as to just how bad things were.


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    #12
    population
    Registered Users Posts: 1,509 ✭✭✭population


    smccarrick wrote: »
    1. You have to file a tax return declaring the rental income.
    2. You are not entitled to TRS on your mortgage
    3. Your lending institution would normally be expected to move you to an investment mortgage, as it is no longer your PPR (regardless of what Eddie Hobbs or anyone says- if you are not living in the property- it is *not* your PPR)
    4. Whether the rent is sufficient to cover your mortgage or not- has zero bearing on whether you owe tax on it
    5. You are allowed a number of deductions from the rental income prior to determination of taxable income- the current main deduction being mortgage interest- which is currently allowed at 75% (though the proposals are to phase this out by 2017).

    Yes- its not nice loosing your mortgage interest relief- however the 75% allowance of mortgage interest against your rental income- is a far more lucrative benefit than is the mortgage relief.

    Please get out of the notion that just because you're not covering your mortgage with the rent, that you're not making a profit, or do not have tax to pay (while you may not owe tax, its determined by other factors).

    Everything here is 100% correct. Though unpalatable, the fact of the matter is that there has never been a worse time to be a landlord. My rent does not reach the mortgage, lost my Interest relief and along with PRTB/NPPR/Acountants fees/Management Fees and upcoming Property and Water charges, it is not easy out there


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    #13
    paul71
    Registered Users Posts: 3,251 ✭✭✭paul71


    Hate to add another point to the list of bad news but in law once the property is no longer your principle private residence you become liable to Capital Gains Tax on any profit made when you sell the property,(Liable on a pro ratia basis of time it was your residence vs time rented with a years extra relief).

    I am aware that the property market makes it unlikely that there would be a profit currently unless you bought in the early 90s but at some point down the line it may become an issue again.


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    #14
    Oral Surgeon
    Registered Users Posts: 3,240 ✭✭✭Oral Surgeon


    helen1 wrote: »
    Not sure if anyone was listening to Eddie Hobbs on Newstalk last night. A guy rang in saying that he wanted to rent out the house he bought to help with mortgage payments. He had two questions
    Did he have to inform the bank as he was afraid that this would change the terms of the mortgage i.e. it would be viewed as investment property. Eddie said that he wouldn't bother and that as long as the money was been paid every month that they had more important things to look at.
    Secondly would he have to inform the revenue. Again Eddie said no that it would still be viewed as his principal private residence and so there would be no need to tell them.
    I may have missed something on this as i would have taught this was incorrect. The reason I ask was because i am in a similar position and I understood that I would need to declare the rental income to the revenue.

    Didn't hear it but sounds to me like he was talking about the rent a room scheme, so you still live there and most likely the rent will be below the threshold for paying tax.... also it's still your home so no need to change T&C of mortgage...


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    #15
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    Oral Surgeon wrote: »
    Didn't hear it but sounds to me like he was talking about the rent a room scheme, so you still live there and most likely the rent will be below the threshold for paying tax.... also it's still your home so no need to change T&C of mortgage...

    The caller was quite clear, there was no scope for misunderstanding...


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    #16
    Oral Surgeon
    Registered Users Posts: 3,240 ✭✭✭Oral Surgeon


    athtrasna wrote: »
    The caller was quite clear, there was no scope for misunderstanding...

    Thanks Enda;)


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    #17
    paddy147
    Banned (with Prison Access) Posts: 15,858 ✭✭✭✭paddy147


    You have to legally declare rental income to the CWO when getting mortgage interest suppliment/relief.This is classed as an income and therefore you will most likely lose your suppliment/relief,as you now have another income (as in a rental income).

    If you dont declare it,then you are commiting blatant fraud and causing tax payers money.

    You will be caught out,through your PPS number and you will then be made to repay any money that you claimed via fraud.


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    #18
    djmcr
    Closed Accounts Posts: 237 ✭✭djmcr


    smccarrick wrote: »
    If he actually said what Helen is suggesting he said, he deserves to be arrested and jailed. Don't know what the exact charge would be? Promotion of conspiracy to defraud perhaps?

    You can drive this country to almost financial ruin and you won't get arrested and jailed so if someone doesn't cancel their TRS do they deserve to be jailed. I'm not condoning the act if the OP goes ahead with it but since the top bankers seem to be getting off scot free for their actions you can't blame the OP for at least considering it


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    #19
    paddy147
    Banned (with Prison Access) Posts: 15,858 ✭✭✭✭paddy147


    djmcr wrote: »
    You can drive this country to almost financial ruin and you won't get arrested and jailed so if someone doesn't cancel their TRS do they deserve to be jailed. I'm not condoning the act if the OP goes ahead with it but since the top bankers seem to be getting off scot free for their actions you can't blame the OP for at least considering it


    If your mate stuck his hand into the fire,would you do the same???

    Fraud is fraud and is illegal no matter what amount it is and who does it.

    Also,your PPS number will show this up and you will be caught out this way too.


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    #20
    djmcr
    Closed Accounts Posts: 237 ✭✭djmcr


    paddy147 wrote: »
    If your mate stuck his hand into the fire,would you do the same???

    Not condoning the action but if my mate stuck his hand in the fire and got off scot free then I would have no problem in considering doing the same


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    #21
    FIFA8
    Closed Accounts Posts: 2 ✭FIFA8


    Hi,

    I am going to aus with my partner as we have nor work here and thinkin about putting my house up for rent. We will not cover the mortgage and with all the charges i think it is crazy and that you lose the trs does anyone no if there is extra charges you have to pay if not in the country and are renting your house out.(I would say something if i was making the mortgage with the rent but still would have to out money towards it)the reason we have to leave and rent is becauce no jobs and will eventually not be able to pay for the house.


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    #22
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    FIFA8 wrote: »
    Hi,

    I am going to aus with my partner as we have nor work here and thinkin about putting my house up for rent. We will not cover the mortgage and with all the charges i think it is crazy and that you lose the trs does anyone no if there is extra charges you have to pay if not in the country and are renting your house out.(I would say something if i was making the mortgage with the rent but still would have to out money towards it)the reason we have to leave and rent is becauce no jobs and will eventually not be able to pay for the house.

    1. Whether you cover the mortgage or not has no bearing on whether you have a tax liability associated with the rental income.

    2. If you are no longer tax resident in the country- legally the tenant is supposed to withold 20% of the gross rent and forward it to the Revenue Commissioners. You are provided with a certificate of this deposit with the Revenue Commissioners- which goes towards any tax due at the end of the year (note- its entirely possible that the bulk or all of this may be refunded, if you do not have a taxable income associated with the rent (aka if your allowable costs exceed the income).

    3. While I sympathise with your situation- letting a property when you're not tax resident here, is a little more convoluted than were you tax resident. You should appoint an agent- and you do need to furnish an annual return to the Revenue Commissioners.

    Yes- you loose your TRS- and are automatically moved onto an investor mortgage- but 75% of the mortgage interest is currently an allowable cost.......

    You do need to pay the NPPR, the new property tax, register the lease with the PRTB etc etc.


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    #23
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    This rent your property and rent yourself is becoming more and more popular.
    There is no doubt that people are doing this without even being aware of the potential consequences.
    This is definately the type of thing that will catch up with you eventually both from a Revenue and Bank perspective.
    It is a lose/lose situation and should not be encouraged.
    Full disclosure and above board ftw.


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    #24
    FIFA8
    Closed Accounts Posts: 2 ✭FIFA8


    I am not renting out my house by choice and going renting some were. I am renting as i have to go to another country to work as there is nothing here, i do want to do everthing above board but with all the charges it looks like i will have to put 400 euro towards my mortgage and thats for now, i just think its disgracfull when so many peole get things for free and all the banks get a with with what they have done to this country.


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    #25
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    I agree with you- it is disgraceful, unfortunately the law is what it is...........
    Petition your local representatives to have more favourable measures put in place for those who rent out their PPR- it seems like it would be reasonable to expect a different manner of treating people who let their sole residence than people who have a whole stable of investment properties- however everyone is treated identically as it stands.

    You really need to look into whats on the horizon too- the reduction in mortgage interest as an allowable expense and its scheduled abolition as an allowable expense by 2017- being the very obvious one in this respect.

    I do sympathise- the way things are structured at the moment you are damned if you do, and damned if you don't though...........


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    #26
    quacky
    Closed Accounts Posts: 10 ✭quacky


    Great thread, exactly the information I was looking for.
    Can anyone tell me if you rent your ppr and do everything above board and lose your mortgage interest relief do you only lose it for the period that you are renting for or is it gone for good?
    Thanks


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    #27
    the_big_kahuna
    Registered Users Posts: 92 ✭✭the_big_kahuna


    This is a great thread and exactly what I was looking for too so I have decided to continue this than start a new thread :)

    If I rent out my property, and lose my Mortgage Interest Relief, did I read correctly that this can still be claimed in some form when doing tax returns?

    A lot of this stuff is way over my head so the help is very much appreciated :)


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    #28
    riclad
    Registered Users Posts: 8,184 ✭✭✭riclad


    YOU Can claim tax credits,75 per cent of the mortgage interest as a landlord ,i dont know if theres a limit per year,
    see http://www.irishlandlord.com/index.aspx?page=faq&answer=19#answer

    you need to register as a landlord with the prtb to claim this tax credit.
    see http://www.revenue.ie/en/tax/it/rental-income.html#section2 ,
    the local council,charge 200 per year to all landlords.
    mortgage interest relief for non landlords has a ceiling per year.IF you are working in oz, your tax credits, are almost incendental, as you can only be taxed if you Make a profit on the house, i cant see you making a profit,after paying mortgage, expenses,insurance,maintenance.
    You have to fill in a tax form each year,or pay an accountant to do so.
    ie theres no point in me getting 30 k tax credits, if my profit,is only 3k, ie the last 27k
    tax credits are of little use to me.
    i cant use them in another country or give them to someone else.


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