Renting A House while letting your own out.

zef

Hi, I inherited my house a when a close relative died. I am enormously greatful to be rent/mortgage free, but would like to move somewhere a little more rural, and nearer family.
My idea is to rent first to make sure I like it for 6mths-1 year.
To do this I would have to re-paint & re-carpet/ laminate some rooms. It's a 3 bed semi on the small side, built around 1985. Would 2-3k cover this? The outside is in good decorative order.
My idea is to use the rental income to pay my rent on a property , I would hope to get min 850, max 975pm for mine, and have seen houses which would be ideal for me for 550-750 eur p.m.

Can any of you see any pitfalls or things I may not have thought of? Thanks.

Peanut2011

Your tax liabilities!

Caveman1

I would say make sure you have money aside incase any issues arise, in the last property I rented the boiler went and for the work to be done it cost nearly 2 grand, took the landlord nearly 3 weeks to get it sorted as he said he hadnt the cash.

the_syco

zef wrote: »

To do this I would have to re-paint & re-carpet/ laminate some rooms. It's a 3 bed semi on the small side, built around 1985. Would 2-3k cover this? The outside is in good decorative order.

Word of advice; cheap sh|te doesn't usually last long. So keep that in mind if buying any appliances, that you may have to replace it a few times when they break down.

relax carry on

zef wrote: »

Hi, I inherited my house a when a close relative died. I am enormously greatful to be rent/mortgage free, but would like to move somewhere a little more rural, and nearer family.
My idea is to rent first to make sure I like it for 6mths-1 year.
To do this I would have to re-paint & re-carpet/ laminate some rooms. It's a 3 bed semi on the small side, built around 1985. Would 2-3k cover this? The outside is in good decorative order.
My idea is to use the rental income to pay my rent on a property , I would hope to get min 850, max 975pm for mine, and have seen houses which would be ideal for me for 550-750 eur p.m.

Can any of you see any pitfalls or things I may not have thought of? Thanks.

As you have no mortgage on the property you are going to rent out, your taxable income will be pretty high. Have you considered the tax implications of renting your property?

zef

Hi- Tax, umm hmm, was going to talk to a family member accountant about that.

The reason I gave a cheap budget for repaint & floors is that I will most likely be selling the house and buying more rurally after I do this experiment in rural life. Is it worth adding a few k to this I wonder?
I have good appliances in it now that are less than 2 years old.

If the boiler blew up (god forbid!) would the house (buildings) insurance not cover it? I guess if renting I would have to change this insurance. Contents ins too.
I want to move rurally. But I don't want to make any 'sudden decisions' after 2 bereavements in the family in the last 3 months. This is why i'm thinking of renting. If the taxation rules this out, I'll have to think about selling, in time I guess.

Rasmus

Property tax, BER, PRTB, making sure there is enough cash to cushion any unforeseen circumstances etc. Are you really considering not making sure stuff is working correctly and hoping the insurance will cover it if it goes belly up?

Ray Palmer

zef wrote: »

Hi- Tax, umm hmm, was going to talk to a family member accountant about that.

The reason I gave a cheap budget for repaint & floors is that I will most likely be selling the house and buying more rurally after I do this experiment in rural life. Is it worth adding a few k to this I wonder?
I have good appliances in it now that are less than 2 years old.

If the boiler blew up (god forbid!) would the house (buildings) insurance not cover it? I guess if renting I would have to change this insurance. Contents ins too.
I want to move rurally. But I don't want to make any 'sudden decisions' after 2 bereavements in the family in the last 3 months. This is why i'm thinking of renting. If the taxation rules this out, I'll have to think about selling, in time I guess.

People are making it sound like you are not going to make any money becasue of tax. It is like any other income you will have to pay tax on it. As you have no mortgage on it will be pretty much all profit.

You can write off maintenace costs against the income on rental but not prior to renting. If you can get a tenant in and paint the place after that you actually save a lot of money. The problem not many people want to be living in a place as it is being done up.

Boiler blowing up is very rare, but heating or appliance do cease to function and have to be replaced. Insurance will not cover this but you can write the expenses off as I already stated. Content insurance is unusal to have on rental properties.

Once you rent the property out you enter the area of CGT but you don't if it is your residence. You kind of have to think out your plan more and see what the figures could be.

ted1

I'd advise not to sell, keep getting an income from the house and sell if the market picks up.

with regards spending money on carpet etc, don't do it all in the 1 year, talk to you r accountant family member. you can write this off againest income and doing it all in one year may resutl in you not gettign th best tax break.

zef

Thank you for all the advice. It is something I will definitely be doing in time - selling the house.
As for the rental idea - it's not so much i'd want to make money on it, just enough to pay my own rent and cover the costs and potential issues with renting out my own.
There's more to this than I thought.
I was thinking that re: rising prices, it would suit me due to rising Dublin prices anyway.
I could afford a small rural property without selling.
But they seem to be getting cheaper. I guess there is no rush, need to wait for younger son to be done with the LC this year.
Will talk with family about it again, thanks again for the advice- it's all scary new territory for me!

D3PO

if your plan is to sell this house remember by renting it you have potential CGT liability as a result of renting. So be sure to do your maths as to weather renting it out is actually going to be profitable in the term your thinking about first.