Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Tell bank if renting apartment?

Options
  • 21-07-2012 12:07pm
    #1
    brianb10
    Registered Users Posts: 112 ✭✭


    If i rent out my apartment i will lose my mortgage interest relief of 30%.
    If i do not tell the bank and i take in a tenant that has not been renting before 2010 (therefore they are not entitled to rent relief) is there any way the bank would know i was renting it and if they did find out what would the consequences be?


Comments

  • Options
    #2
    Funnyonion79
    Registered Users Posts: 569 ✭✭✭Funnyonion79


    brianb10 wrote: »
    If i rent out my apartment i will lose my mortgage interest relief of 30%.
    If i do not tell the bank and i take in a tenant that has not been renting before 2010 (therefore they are not entitled to rent relief) is there any way the bank would know i was renting it and if they did find out what would the consequences be?

    It's not the bank you should be worrying about - it's the Revene. If you have a tracker mortgage, there's no way the bank will find out that you're renting out the property and if they did - worst case scenario would be that they would take you off the tracker and put you on a buy to let rate - but you may be able to argue against this, depending on the terms and conditions in your original mortgage documentation.

    However, your biggest problem is that if you do not declare to the Revenue that your principal private residence (PPR) has changed to a rental property and continue to claim TRS credits (or mortgage interest relief) on this rental property, then you are committing tax fraud and could be liable for huge fines.

    If you have not registered as a landlord with the PRTB and your tenants end up causing problems (with noise/antisocial behaviour etc), anyone can look up the PRTB database to see if the property has been registered. If it hasn't, you can be reported to the PRTB and the Revenue will then find out that you have been claiming mortgage interest relief illegally, that you haven't been paying tax on your rental income (irregardless of whether you're making a profit or loss on the rental income) and you will also be subject to fines from the PRTB for failing to register.

    Not worth the risk in my opinion. If you register everything legally, then you can offset 75% of the interest (not capital) part of your mortgage when calculating your annual tax return.


  • Options
    #3
    Funnyonion79
    Registered Users Posts: 569 ✭✭✭Funnyonion79


    Funnyonion79 wrote: »
    brianb10 wrote: »
    If i rent out my apartment i will lose my mortgage interest relief of 30%.

    If i do not tell the bank and i take in a tenant that has not been renting before 2010 (therefore they are not entitled to rent relief) is there any way the bank would know i was renting it and if they did find out what would the consequences be?

    It's not the bank you should be worrying about - it's the Revene. If you have a tracker mortgage, there's no way the bank will find out that you're renting out the property and if they did - worst case scenario would be that they would take you off the tracker and put you on a buy to let rate - but you may be able to argue against this, depending on the terms and conditions in your original mortgage documentation.

    However, your biggest problem is that if you do not declare to the Revenue that your principal private residence (PPR) has changed to a rental property and continue to claim TRS credits (or mortgage interest relief) on this rental property, then you are committing tax fraud and could be liable for huge fines.

    If you have not registered as a landlord with the PRTB and your tenants end up causing problems (with noise/antisocial behaviour etc), anyone can look up the PRTB database to see if the property has been registered. If it hasn't, you can be reported to the PRTB and the Revenue will then find out that you have been claiming mortgage interest relief illegally, that you haven't been paying tax on your rental income (irregardless of whether you're making a profit or loss on the rental income) and you will also be subject to fines from the PRTB for failing to register.

    Not worth the risk in my opinion. If you register everything legally, then you can offset 75% of the interest (not capital) part of your mortgage when calculating your annual tax return.

    Also meant to say - don't tell the bank - they don't need to know but you have to tell Revenue. Otherwise you're breaking the law.


  • Options
    #4
    odds_on
    Closed Accounts Posts: 1,869 ✭✭✭odds_on


    Funnyonion79 wrote: »
    Also meant to say - don't tell the bank - they don't need to know but you have to tell Revenue. Otherwise you're breaking the law.
    Does a mortgage agreement not have a clause that prohibits renting out the property (I've never had a mortgage so don't know)?

    Likewise, most leases have a clause that prohibits sub-letting or having others residing in the property without the landlord's written consent.

    But a landlord would be furious if his tenant sub-let without his permission - but you seem to say that the bank should not be informed (because they could change the mortgage type to a buy to let mortgage).

    A bit hypocritical, isn't it?


  • Options
    #5
    Funnyonion79
    Registered Users Posts: 569 ✭✭✭Funnyonion79


    odds_on wrote: »
    Funnyonion79 wrote: »
    Also meant to say - don't tell the bank - they don't need to know but you have to tell Revenue. Otherwise you're breaking the law.
    Does a mortgage agreement not have a clause that prohibits renting out the property (I've never had a mortgage so don't know)?

    Likewise, most leases have a clause that prohibits sub-letting or having others residing in the property without the landlord's written consent.

    But a landlord would be furious if his tenant sub-let without his permission - but you seem to say that the bank should not be informed (because they could change the mortgage type to a buy to let mortgage).

    A bit hypocritical, isn't it?

    My mortgage documents mention nothing about renting out my property, so in my case, no it's not hypocritical of me. It's my property - not the banks. The bank only hold an interest in the property because of the mortgage so a bank is not the same as a landlord. If they were, then they would be liable for the household charge and not me.


  • Options
    #6
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    odds_on wrote: »
    Does a mortgage agreement not have a clause that prohibits renting out the property (I've never had a mortgage so don't know)?

    Some do, some don't. If your mortgage agreement does not specify it, there is no need or onus to tell the Bank.
    Revenue, PRTB, Insurance, NPPR yes, but not the Bank.


  • Advertisement
  • Options
    #7
    letitroll
    Registered Users Posts: 146 ✭✭letitroll


    brianb10 wrote: »
    If i rent out my apartment i will lose my mortgage interest relief of 30%.
    If i do not tell the bank and i take in a tenant that has not been renting before 2010 (therefore they are not entitled to rent relief) is there any way the bank would know i was renting it and if they did find out what would the consequences be?


    Volunteering information to banks that cost the taxpayer billions is a moot point with me.

    Now not paying tax on rental income and not registering tenancies with the PRTB well that's defrauding the tax payer..................not what you want to hear I know

    On the flipside the greatest bargaining power you could give any smart tenant is the fact that your unregistered. All they have to do is look up on the PRTB if the apartment is registered or if its not. If its not they have YOU by the short and curlies. Not a great situation to be in when your tenants threaten to dob you into revenue if you dont do X, Y and Z


Advertisement