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Renting out my apartment

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  • 09-10-2013 9:17pm
    #1
    mccarthy.087
    Registered Users Posts: 55 ✭✭


    Due to work commitments I have had to relocate to a different part of the country and have rented out my apartment to a couple which is mortgaged and am using the rent received to cover the mortgage payment and I am subsequently renting out a house myself close to my new job. My question is am I suppose to file some sort of tax return now or declare the rent I'm receiving. I'm a PAYE worker if that makes a difference.


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    #2
    Santa Cruz
    Banned (with Prison Access) Posts: 3,126 ✭✭✭Santa Cruz


    mccarthy.087 wrote: »
    Due to work commitments I have had to relocate to a different part of the country and have rented out my apartment to a couple which is mortgaged and am using the rent received to cover the mortgage payment and I am subsequently renting out a house myself close to my new job. My question is am I suppose to file some sort of tax return now or declare the rent I'm receiving. I'm a PAYE worker if that makes a difference.


    Declare it my good man. This is Ireland. I would advise you to spend a small sum on an accountant as he/she can advise you in relation to claiming for management fees, capital allowances, and any other costs incurred in the renting (include about 600 for transport/telephone costs). Keep a receipt of everything you buy in relation to the apartment e.g new kettle, paint, etc.

    This way the tax liability will be quite low.


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    #3
    odds_on
    Closed Accounts Posts: 1,869 ✭✭✭odds_on


    mccarthy.087 wrote: »
    Due to work commitments I have had to relocate to a different part of the country and have rented out my apartment to a couple which is mortgaged and am using the rent received to cover the mortgage payment and I am subsequently renting out a house myself close to my new job. My question is am I suppose to file some sort of tax return now or declare the rent I'm receiving. I'm a PAYE worker if that makes a difference.
    Apart from your tax liability, have you registered the tenancy with the PRTB?
    You should also have landlord's insurance.
    Most mortgage agreements prohibit renting out the property (it is meant to be your PPR) and if they find out, you may be moved to a more expensive "buy to rent" mortgage rate.


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    #4
    mccarthy.087
    Registered Users Posts: 55 ✭✭mccarthy.087


    odds_on wrote: »
    Apart from your tax liability, have you registered the tenancy with the PRTB?
    You should also have landlord's insurance.
    Most mortgage agreements prohibit renting out the property (it is meant to be your PPR) and if they find out, you may be moved to a more expensive "buy to rent" mortgage rate.

    I'm using a letting agency and they registered the property with the PRTB. Other than that I haven't done anything else. I haven't a clue how much tax I would be liable for, current mtg is €625 and receiving €700 rent with €60 of that going to the letting agency. I know if I inform the bank I will lose my TRS.


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    #5
    mccarthy.087
    Registered Users Posts: 55 ✭✭mccarthy.087


    Santa Cruz wrote: »
    Declare it my good man. This is Ireland. I would advise you to spend a small sum on an accountant as he/she can advise you in relation to claiming for management fees, capital allowances, and any other costs incurred in the renting (include about 600 for transport/telephone costs). Keep a receipt of everything you buy in relation to the apartment e.g new kettle, paint, etc.

    This way the tax liability will be quite low.

    How do I go about calculating roughly how much tax I would be liable for. Mtg €620 and rent received €700 with €60 of that going to letting agency, I'm in the higher tax rate.


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    #6
    djimi
    Registered Users Posts: 13,237 ✭✭✭✭djimi


    If you are unsure about your tax liability then contact an accountant to assist you (I think the cost is also deductable).


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


    djimi wrote: »
    If you are unsure about your tax liability then contact an accountant to assist you (I think the cost is also deductable).

    yes it is tax deductible.

    OP id agree get an accountant to help you file would be the best bet. You also have to let your bank know to stop paying your TRS. Your not entitled to it.


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    #8
    murphaph
    Registered Users Posts: 19,022 ✭✭✭✭murphaph


    Santa Cruz wrote: »
    This way the tax liability will be quite low.
    That's a bold statement. Assuming the OP pays any tax at the 41% rate then all his rental profit will be taxable at this rate (plus PRSI from 2014 and USC already, so looking at 50%+ of rental profit, if any). There aren't really many allowances that add up to much beyond the 75% mortgage interest relief and the allowance for depreciation of fixtures and fittings.

    I've also seen conflicting opinions (from accountants) as to whether or not transport costs are allowable.

    Pay an accountant who does rental income returns regularly (look for recommendations on askaboutmoney perhaps, there are plenty of useless accountants out there so beware). You can usually just use him for the 1st year (make sure you get his return to see what he's claiming for) and then do it yourself thereafter. It's not tricky once you know what to claim for.


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


    murphaph wrote: »
    I've also seen conflicting opinions (from accountants) as to whether or not transport costs are allowable.

    They should be but as the OP has an EA they cannot file for transport costs for a property they aren't even actively managing. Well they can but if audited they will be screwed.


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    #10
    Full_TiltKeith
    Registered Users Posts: 165 ✭✭Full_TiltKeith


    D3PO wrote: »
    yes it is tax deductible.

    OP id agree get an accountant to help you file would be the best bet. You also have to let your bank know to stop paying your TRS. Your not entitled to it.

    Sorry for hi jacking the thread but could you expand on this? We are going to rent our apartment and get a new mortgage from bank and we were told that TRS will not be affected on the original mortgage? Is this correct as it is a slightly different situation that the OP?


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


    Full_TiltKeith wrote: »
    Sorry for hi jacking the thread but could you expand on this? We are going to rent our apartment and get a new mortgage from bank and we were told that TRS will not be affected on the original mortgage? Is this correct as it is a slightly different situation that the OP?

    TRS is only available on your main residence. As the OP isn't living there it is not his main residence and therefore he doesn't not qualify nor is he entitled to TRS.

    Can you clarify your situation. Your going to rent out your apartment that you have TRS on and get a second mortgage to buy a second property that you will then live in ?


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    #12
    Full_TiltKeith
    Registered Users Posts: 165 ✭✭Full_TiltKeith


    D3PO wrote: »
    TRS is only available on your main residence. As the OP isn't living there it is not his main residence and therefore he doesn't not qualify nor is he entitled to TRS.

    Can you clarify your situation. Your going to rent out your apartment that you have TRS on and get a second mortgage to buy a second property that you will then live in ?

    That is correct. We specifically asked the mortgage adviser this and she said that the TRS will not be affected. Now I'm a bit confused as it seems we need to be living in the residence, which we will not be. I also doubt that the mortgage will just be added to the existing mortgage as we will own two different properties.


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


    Full_TiltKeith wrote: »
    That is correct. We specifically asked the mortgage adviser this and she said that the TRS will not be affected. Now I'm a bit confused as it seems we need to be living in the residence, which we will not be. I also doubt that the mortgage will just be added to the existing mortgage as we will own two different properties.

    YOUR MORTGAGE ADVISOR IS TAKING THROUGH THEIR HOLE.

    All the detail you need is here on the revenue site including the exact questions relating to what you asked. Ive pasted the two main questions and the revenue answers. Which clearly show you wont be entitled to TRS at all.

    Can I claim mortgage interest relief if I move out of my main residence and rent it out?

    No. As the house would no longer be your principal private residence, you would not be entitled to mortgage relief.

    What is the position if I take out a loan in 2013 or later?

    Home Loans taken out in 2013 or later do not qualify for mortgage interest relief. Tax relief is available in respect of interest paid on a qualifying loan, taken out on or after 1 January 2004 and on or before 31 December 2012, which was used to purchase, repair or improve a qualifying residence. Taken out prior to 31 December 2012 means that the loan has been drawn down and used by you on the qualifying residence (e.g. purchase of site plus building costs) before that date.

    as you no longer live in the qualifying house it isn't eligible for TRS, as the new house loan is drawn down after TRS has been abolished that is not eligible. Meaning you would not be eligible for TRS.

    My suspicions are the new mortgage is a BTL one ? Therefore the advisor is essentially saying keep stum about which house is your primary residence and keep claiming TRS. If so Im both shocked and appalled and its fraud.

    Im hoping the guy/girl is just an idiot that doesn't know their job, and given its a banker most of them don't.


    http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html#section1


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    #14
    Full_TiltKeith
    Registered Users Posts: 165 ✭✭Full_TiltKeith


    Brilliant, now to give out to the bank and ask them why they are giving us some ridiculous information. Thanks for that.


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    #15
    joe Lenihan
    Registered Users Posts: 3 ✭joe Lenihan


    Yes, you must declare the rent as income, but any interest payments on the mortgage and any other expenses related to the house are tax deductable. You must also register with the PRTB


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    #16
    Uriel.
    Registered Users Posts: 8,061 ✭✭✭Uriel.


    joe Lenihan wrote: »
    Yes, you must declare the rent as income, but any 75% of your interest payments on the mortgage and any other expenses related to the house rental are tax deductable. You must also register with the PRTB

    FYP


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    #17
    Full_TiltKeith
    Registered Users Posts: 165 ✭✭Full_TiltKeith


    Uriel. wrote: »
    FYP


    Ah, well that's not too bad then, a kind of substitute for the interest relief in a way on the original mortgage. Thanks guys.


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    #18
    Uriel.
    Registered Users Posts: 8,061 ✭✭✭Uriel.


    Full_TiltKeith wrote: »
    Ah, well that's not too bad then, a kind of substitute for the interest relief in a way on the original mortgage. Thanks guys.

    You can also include mortgage protection cover as a legitimate expense - although only the death benefit variety and not the specified illness cover


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    #19
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    joe Lenihan wrote: »
    Yes, you must declare the rent as income, but any interest payments on the mortgage and any other expenses related to the house are tax deductable. You must also register with the PRTB

    Wrong. 75% of interest can be deducted form your tax liability. Please don't give out advise if you don't know the answer.


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    #20
    mccarthy.087
    Registered Users Posts: 55 ✭✭mccarthy.087


    Thanks everyone for your advice and input. Where would I find an accountant that specializes in this area? I assume there isn't much work involved so would I need one to one personal contact or could everything be done by email and post if I found an accountant that was in a different part of the country? And also how much should I expect roughly to be charged for this service?


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    #21
    Uriel.
    Registered Users Posts: 8,061 ✭✭✭Uriel.


    mccarthy.087 wrote: »
    Thanks everyone for your advice and input. Where would I find an accountant that specializes in this area? I assume there isn't much work involved so would I need one to one personal contact or could everything be done by email and post if I found an accountant that was in a different part of the country? And also how much should I expect roughly to be charged for this service?

    I am not convinced that you need an accountant to be perfectly honest. Yes, it can be confusing etc at times, but it's not terribly difficult.

    Depending on the amount of rent you will be charging, it really is a simple as making a Form 12 return (PAYE worker) every year. It perhaps get's more complicated if you go over certain rental income thresholds. I'd have a look at revenue site in the first instance - check out Form 12s, Rental Income guidance etc..

    If you find specifics confusing you can always ask here or on the taxation forum. If you find it too overwhelming, then sure I'd advise going down the accountant route. But I'd do a little research in the first instance.


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    #22
    odds_on
    Closed Accounts Posts: 1,869 ✭✭✭odds_on


    Is there not PRSI contributions to be paid as well or does that depend on the income from the rental?


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    #23
    Uriel.
    Registered Users Posts: 8,061 ✭✭✭Uriel.


    odds_on wrote: »
    Is there not PRSI contributions to be paid as well or does that depend on the income from the rental?

    For PAYE workers, PRSI is now chargeable - as of the last budget (I think) - so 2013 being the first year (returns not due till Oct 2014) but has always been there for non-PAYE.


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    #24
    Santa Cruz
    Banned (with Prison Access) Posts: 3,126 ✭✭✭Santa Cruz


    D3PO wrote: »
    Wrong. 75% of interest can be deducted form your tax liability. Please don't give out advise if you don't know the answer.


    ." Please don't give out advise if you don't know the answer"

    If all the posters stuck by that no one would reply to anything!


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    #25
    pippip
    Registered Users Posts: 2,249 ✭✭✭pippip


    How do you find out your mortgage interest for a tax return?


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    #26
    murphaph
    Registered Users Posts: 19,022 ✭✭✭✭murphaph


    pippip wrote: »
    How do you find out your mortgage interest for a tax return?
    You should be getting a mortgage account statement each year from your lender showing your repayments in the previous year and there you will see a figure for interest. If your lender is not sending you annual statements then you should request them.

    You may also request a certificate of interest paid from your bank which will also suffice.


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    #27
    Thargor
    Registered Users Posts: 17,936 ✭✭✭✭Thargor


    D3PO wrote: »
    yes it is tax deductible.

    OP id agree get an accountant to help you file would be the best bet. You also have to let your bank know to stop paying your TRS. Your not entitled to it.
    Sorry for OT but do you know off the top of your head if the accountants fee is deductible when you use them to pay your capital gains tax? (Capital gains from selling shares not rent).


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