How will renting affect my mortgage

echo59

Hi,

I'm looking for some advice or figures regarding my mortgage. I currently have a relatively small mortgage on my house €690 approx per month. My circumstances have changed and me and my family have had to move away for work. I'm considering renting out the house after a few months (will have more job security) but I'm trying to weigh up the pros and cons of it.

I'm a first-time buyer, so I still have mortgage interest relief. I guess that when I rent out I will lose that.

I'll also have to pay income tax on my rental income. So if I was renting for say €500 a month (being optimistic...) what tax would I pay? I'm currently on the higher rate anyway.

Besides PRTB registration, are there other costs involved? I know my house insurance will go up. Any idea by how much, as a rough index?

The house will need quite a bit of work before I could rent it out as well.


Thanks,

echo

D3PO

Your correct you will lose your TRS.

Regarding what tax you will pay how much your rent is has no bearing whatsoever on this. You pay tax on all the rental income minus your deductible expenses. USC & PRSI are due aswell so if your on the higher bracker you looking at 52% of that taxable income being due.

You also have down the line potential CGT implications aswell.

Do you research and your maths renting out your home is not something to get into lightly and make sure you understand both yours and your tenants obligations before doing anything.

Oral Surgeon

echo59 wrote: »

Hi,

I'm looking for some advice or figures regarding my mortgage. I currently have a relatively small mortgage on my house €690 approx per month. My circumstances have changed and me and my family have had to move away for work. I'm considering renting out the house after a few months (will have more job security) but I'm trying to weigh up the pros and cons of it.

I'm a first-time buyer, so I still have mortgage interest relief. I guess that when I rent out I will lose that.

I'll also have to pay income tax on my rental income. So if I was renting for say €500 a month (being optimistic...) what tax would I pay? I'm currently on the higher rate anyway.

Besides PRTB registration, are there other costs involved? I know my house insurance will go up. Any idea by how much, as a rough index?

The house will need quite a bit of work before I could rent it out as well.


Thanks,

echo

Yes you pay tax but there are many tax deductable expenses;

You lose the TRS but you can write off 75% of the mortgage interest charged for that year. This is usually higher than the TRS in most cases but your mortgage payment is less so may just break even for you. Look at your annual mortgage statement to calculate this 75%.

You can write off your management fees if applicable

You can write off the mortgage/life protection policy (basic reducing policies only)

You can write off up to €1000/year in maintence and repairs. This does not apply to getting the place ready for occupancy, but if the tennants were in and then you changes the beds and sofas then it may apply....!!

I'm not sure about the house insurance but I'd imagine you could deduct that, check this one with your accountant.

PRTB registration fee can be written off

Letting agency fees can be written off

So take all those off the rent amount and then apply the rate of tax. You won't pay that much and you'll be above board...



Regarding CGT, just move back in before you sell it and list it as your PPR....