Novice landlord

beatlesfan3333

I have a house in negative equity, mortgage is 200k and its worth 150k. I spoke to the bank who told me if I rent it out ill most likely lose my tracker mortgage but the woman from the bank implied it was okay if I simply "don't tell the bank". I need to move closer to my job and plan on renting it out without telling the bank. I know as a landlord ill need to register with the PRTB and pay tax at the end of the year. Do you think by registering with the PRTB and paying tax the bank might find out that im renting? Any advice on this would be great, thanks!

murphaph

The bank won't find out anything from these processes. Are you in receipt of TRS? That will need to be cancelled as soon as the property is rented out. You inform Revenue and they instruct the bank to stop allowing the relief, but they won't tell them why. In my opinion banks have so many problems these days with non-payers that they won't/can't waste resources "investigating" everyone whose TRS is cancelled.

beatlesfan3333

Thanks so much for the reply. What is TRS?
Is it mortgage relief? I do get morgage relief so ill need to contact revenue to cancel it will I? Thanks

beatlesfan3333

Sorry you've already said to cancel it with revenue, cheers.

NIMAN

Check out www.irishlandlord.com for lots of useful info.

wersal gummage

If you advise revenue to cancel your TRS:

1) Are you automatically liable for the non principal private residence annual charge?

2) If the bank was to contact you and state that it has noticed that TRS is no longer applicable to your mortgage what possible reason could you offer the bank for this? I mean, other than the property no longer being your principal private residence (which I presume is a condition of your mortgage), what other reasons are there for the cancellation of TRS??

beatlesfan3333

What is the non principal private residence annual charge? And you're right, I wouldn't have a good reason to give the bank for cancelling the TRS which is why I am concerned. I have to move and I can only move if I rent out the house and I can only rent it if I keep my tracker mortgage, its a no win situation. Id like to keep everything above board but my only option seems to be not telling the bank I am renting it..surely other people are renting and not telling their banks so they can keep the tracker?

godtabh

wersal gummage wrote: »

If you advise revenue to cancel your TRS:

1) Are you automatically liable for the non principal private residence annual charge?

2) If the bank was to contact you and state that it has noticed that TRS is no longer applicable to your mortgage what possible reason could you offer the bank for this? I mean, other than the property no longer being your principal private residence (which I presume is a condition of your mortgage), what other reasons are there for the cancellation of TRS??

1. is no longer a tax. Proerpty tax now
2. There are few reaons why this may occur

Mitzy

There is no NPPR liability for 2014 onwards. You must pay the Property Tax which is now deductible as an expense from rental income.
It is highly unlikely that the bank will find out that the house is rented so I would suggest saying nothing!

beatlesfan3333

That's ok, I knew id still be liable for the property tax. I think the best thing to do is to just go ahead and rent it and hope for the best! Why do I need to tell revenue to cancel my mortgage relief? Is that to prevent myself from getting in trouble with revenue for claiming it while im receiving rent?

murphaph

beatlesfan3333 wrote: »

That's ok, I knew id still be liable for the property tax. I think the best thing to do is to just go ahead and rent it and hope for the best! Why do I need to tell revenue to cancel my mortgage relief? Is that to prevent myself from getting in trouble with revenue for claiming it while im receiving rent?

TRS only applies to owner occupied properties. You have no choice but to cancel it or face penalties later. You get 75% interest relief anyway from Revenue so TRS is more or less irrelevant.

beatlesfan3333

Ok thats good then. Ill cancel the mortgage relief with revenue and hope the bank doesn't get in touch, fingers crossed! Thanks for the help guys, much appreciated.

NIMAN

I was a LL for a couple of years, cancelled TRS and followed all the right procedures, except saying nothing to the bank.

I too read stories about how they would find out I was now renting the house and I'd lose my tracker, but in reality I never heard from them. Maybe if you miss a mortgage payment it might be different but don't worry too much about this.

sunnysoutheast

Mitzy wrote: »

You must pay the Property Tax which is now deductible as an expense from rental income.

Alas, this is not correct (yet). From the Revenue:

9. I am a landlord and have paid Local Property Tax (LPT) on my rental properties. Is the LPT that I paid an allowable deduction against rental income?

The Government has accepted in principle the recommendation in the Thornhill Report that LPT be a deductible expense in calculating a landlord’s taxable rental income and that the deduction be phased in over a number of years with the start date being determined by the economic and budgetary situation. However, the Government has not yet decided to bring the deduction into effect. Until the necessary amendment is made to section 97 of the Taxes Consolidation Act 1997, LPT is not a deductible expense and therefore should not be claimed as a deduction when submitting your Income Tax/Corporation Tax Return for 2013.

sunnysoutheast

beatlesfan3333 wrote: »

Ok thats good then. Ill cancel the mortgage relief with revenue and hope the bank doesn't get in touch, fingers crossed! Thanks for the help guys, much appreciated.

Make sure you have the appropriate insurance coverage in place. Landlord policies are (much) more expensive than o/o policies.

For what it's worth, we rented out our PPR in 2012/2013 and were told by our lenders (pTSB) that there would be no impact on our tracker mortgage.

karen89

Contact Irish property owners association, you dont have to be a member to call them up and get some help, its a great organisation,

Del2005

beatlesfan3333 wrote: »

What is the non principal private residence annual charge? And you're right, I wouldn't have a good reason to give the bank for cancelling the TRS which is why I am concerned. I have to move and I can only move if I rent out the house and I can only rent it if I keep my tracker mortgage, its a no win situation. Id like to keep everything above board but my only option seems to be not telling the bank I am renting it..surely other people are renting and not telling their banks so they can keep the tracker?

You'll have to pay income tax on the rent , at upto nearly 60% in total if on the higher rate, so figure this into your numbers before you move. If you can't afford to rent if you loose the tracker how can you afford to rent elsewhere and top up the mortgage?

beatlesfan3333

My mortgage is 700 per month with the tracker. I'll get about 800 in rent for it. When I move my rent will be about 600 per month so it is affordable ive spoken to a few people about this and they reckon I should keep the mortgage relief and if it is an issue I can claim I wasn't aware I needed to cancel it and go from there? Hopefully the penalties wouldn't be too costly if I do get caught..

Eldarion

beatlesfan3333 wrote: »

My mortgage is 700 per month with the tracker. I'll get about 800 in rent for it. When I move my rent will be about 600 per month so it is affordable ive spoken to a few people about this and they reckon I should keep the mortgage relief and if it is an issue I can claim I wasn't aware I needed to cancel it and go from there? Hopefully the penalties wouldn't be too costly if I do get caught..

This is going to come down on your head for a myriad of reasons beyond the fraud you're admittedly about to undertake.

Your napkin figures are not affordable. You are self admittedly a 'novice' landlord. Can you please do some due diligence and research prior to making the decision and going down this path.

We're going to have a tenant of yours in here in about 6 months complaining they have a landlord who won't replace a washing machine after it breaks or won't fix plumbing issues that's leaking into the ceiling because he can't afford it.

chris85

beatlesfan3333 wrote: »

My mortgage is 700 per month with the tracker. I'll get about 800 in rent for it. When I move my rent will be about 600 per month so it is affordable ive spoken to a few people about this and they reckon I should keep the mortgage relief and if it is an issue I can claim I wasn't aware I needed to cancel it and go from there? Hopefully the penalties wouldn't be too costly if I do get caught..

As already pointed out these figures are not great figures. You have a €100 left over after renting the property. You have maintenance of the property, extra insurance, taxes. Does the €700 take into account you will lose TRS?

I would say you would be foolish to not cancel TRS. Revenue are actually one of the best run government agencies out there and if they find out they will come down on it hard and penalties are big with Revenue. It is fraud dont forget. And they wont buy ignorance of the law. Ignorance does not protect you from laws there. You becoming a landlord means you should go understand laws going with it. Otherwise you are just another cowboy landlord.

D3PO

beatlesfan3333 wrote: »

My mortgage is 700 per month with the tracker. I'll get about 800 in rent for it. When I move my rent will be about 600 per month so it is affordable ive spoken to a few people about this and they reckon I should keep the mortgage relief and if it is an issue I can claim I wasn't aware I needed to cancel it and go from there? Hopefully the penalties wouldn't be too costly if I do get caught..

And all €800 of that is taxable (not just €100 as many novice landlords think) minus deductions so could in real terms be as little as €400 odd that can be contirbuted towards your mortgage, so you need to cover the €300, the TRS you will no longer have plus the €600 to rent your other property.

Is it still affordable ........ ?

beatlesfan3333

Hi guys, I've obviously not given all of the figures. I won't disclose my income but of course I've taken other bills and maintenance into consideration. I am not a cowboy landlord as you so nicely put it. I plan on being a helpful landlord who of course fixes broken appliances etc. And I don't want to commit fraud, of course not. I pay a ridiculous amount of tax and bills, property tax etc. I have never and will never commit fraud. There are people out there who rent their houses without registering with the correct channels or drawing up legal leases. I want to do everything correctly and above the law. I am simply asking for advice to help me with the process of renting out my house. I just wanted to clear that up.

athtrasna

beatlesfan3333 wrote: »

Hi guys, I've obviously not given all of the figures. I won't disclose my income but of course I've taken other bills and maintenance into consideration. I am not a cowboy landlord as you so nicely put it. I plan on being a helpful landlord who of course fixes broken appliances etc. And I don't want to commit fraud, of course not. I pay a ridiculous amount of tax and bills, property tax etc. I have never and will never commit fraud. There are people out there who rent their houses without registering with the correct channels or drawing up legal leases. I want to do everything correctly and above the law. I am simply asking for advice to help me with the process of renting out my house. I just wanted to clear that up.

Which part of not canceling TRS isn't fraud?

chris85

athtrasna wrote: »

Which part of not canceling TRS isn't fraud?

Exactly its black and white here.

wersal gummage

Does notifying revenue to cancel TRS not put them on notice, so to speak, that you intend to, or already are, renting the property?

I fully understand that it is necessary to notify them, just asking whether you may be placing yourself under the spotlight.

In addition in this case, while others have said not to worry about it, the mortgage probably goes from 800 to 1100 or 1200 if Beatles fan loses his tracker I suspect.

Gautama

beatlesfan3333 wrote: »

...pay tax at the end of the year.

You'll pay tax at the end of October, or a couple of weeks later if you do it online.

Once you're up and running, you'll be paying half of last years tax, and an estimate of half of next years tax. Tax is charged on the rental income minus expenses, not rental income minus mortgage repayments minus expenses.

I was in a similar situation to you two years ago. I didn't tell the bank that I moved, for fear of losing the tracker mortgage. So far, so good.

My monthly rental income exceeds my monthly mortgage repayments, however subtract the expenses and I'm losing money on an annual basis. Then there's tax on top of that. On the plus side, when I'm an OAP I should have a regular income and own the property outright.

emeldc

.......... and here's hoping that the tenant you get doesn't only pay the rent for a few months and then stop and then live in your gaff rent free for 18 months before the PRTB can get him out. Just sayin' loike :rolleyes: