Can I rent my apartment to a family member if I travel?

jayjay2010

I bought an apartment early last year as a first time buyer and it is my main residence. I might go travelling later this year and I am wondering if I am legally allowed to rent my apartment out to my brother and his girlfriend, or do I need to declare this to the bank?

My mortgage repayments are reasonably low and I would be renting it out for a little over the mortgage amount just to cover the repayments.

Can I rent a room out as another option? I won't be in the country however so does this technically mean it is no longer my main residence?

Frynge

I think you could rent it out under the rent a room scheme which means you are capped at €12k (I think) but are you sure you want to rent to a family member. There is nothing that breaks family bonds as quick as a deal involving money.

Victor

jayjay2010 wrote: »

do I need to declare this to the bank?

What does your contract with the bank say?

Can I rent a room out as another option? I won't be in the country however so does this technically mean it is no longer my main residence?

You can always rent a room. As to whether you can avail of the rent-a-room scheme is another matter. If you are gone less than a year, I would be inclined to think yes. If gone for more than a year, I would be inclined to say no. Note that if you are working elsewhere, you may have a tax liability there for income in Ireland.

dori_dormer

If you are gone for more than a certain amount of days in a calendar year you will not be a resident, and therefore will be taxed very high on any income. I'd check your timings and those laws.

I believe you also have to be in the property a certain percentage of the time to avail of the rent a room scheme.

sbsquarepants

You're renting to your brother - I assume you can trust him.
Just have him pay the mortgage and say nothing to the bank - they won't care once the payments are made and the tax man gets enough off all of us as it is!

jayjay2010

If I wanted to rent a room out right away, as long as I receive under the 12k per year then do I have to declare this?

I could afford to travel abroad and pay my mortgage but it seems silly if my brother needs a place and is willing to pay it for me just above the actual mortgage amount

Gumbo

Get your brother to lodge the money directly to the account that that mortgage comes out of. Mortgage will be paid and you will build up a small surplus.

How long are you planning to go travelling for?

I would say nothing to the bank but I would also make sure that revenue are squared up as they will come after you.

Also ask your brother to forward on any mail or at least open bank stuff incase payments change etc

jayjay2010

kceire wrote: »

Get your brother to lodge the money directly to the account that that mortgage comes out of. Mortgage will be paid and you will build up a small surplus.

How long are you planning to go travelling for?

I would say nothing to the bank but I would also make sure that revenue are squared up as they will come after you.

Also ask your brother to forward on any mail or at least open bank stuff incase payments change etc

Well a year realistically maybe 2. This won't be happening til April/May at the earliest but I need to do my homework first.

I could essentially charge more than double what I will be charging my brother, but I rather have a family member looking after it than a stranger and I assume that him paying me a small amount each month would incur less taxes.

Example: mortgage approx €450 per month. My brother will pay €550 per month. Market value approx €1,200 per month but I don't want to rent it out to strangers (maybe a few years down the line).

cython

jayjay2010 wrote: »

If I wanted to rent a room out right away, as long as I receive under the 12k per year then do I have to declare this?

I could afford to travel abroad and pay my mortgage but it seems silly if my brother needs a place and is willing to pay it for me just above the actual mortgage amount

Under the rent a room scheme, while you may not be liable for tax on the income, you are required to declare it, yes.

SarahMollie

cython wrote: »

Under the rent a room scheme, while you may not be liable for tax on the income, you are required to declare it, yes.

Yes this is true, even if its tax free up to €12k, you're still obliged to declare it.

When you say you'll be abroad, do you mean traveling with an odd bit of casual work here and there or will you be working property in one place and therefore tax resident in another jurisdiction? If so, you might not be eligible for the rent a room scheme.

kupus

not my business, but you should never mix money with family or friends. Just a bit of old advice I got when I was younger. Not that I have any money to mix anyway!!

MouseTail

Another one who thinks you should just have him pay mortgage and bills and don't seek to profit. I can't see Revenue being in the least interested in such a familial arrangement.

dori_dormer

You'd be surprised what revenue notice. You definitly won't qualify for rent a room scheme if you are gone a year or more. You must live in the property to qualify.

The other issue that popped into my head there was also gift tax. Technically renting below market to a relative is essentially gifting them money. Your brother may be liable to tax on this. 500 a month would definitly be over the yearly allowance I think.

I'd try and contact a tax consultant and tell them what you are planning to maybe do, and ask their opinion on the matter and where you might fall into tax trouble.

Mrs OBumble

dori_dormer wrote: »

The other issue that popped into my head there was also gift tax. Technically renting below market to a relative is essentially gifting them money. Your brother may be liable to tax on this. 500 a month would definitly be over the yearly allowance I think.

I'd try and contact a tax consultant and tell them what you are planning to maybe do, and ask their opinion on the matter and where you might fall into tax trouble.

I was just going to post the same thing: if you rent for less than market value then it may be treated as a gift. But it may be possible to write the rental agreement in such a way that your brother's purpose in living there is providing security for your property and have the rent reflect this.

If you are wealthy enough or well-enough paid that you can travel and pay a mortgage, then I suspect you should already have a tax advisor. Use them. Or if you don't have one, then find one ASAP.

Note: I am not suggesting you do anything illegal. Just that you manage your affairs to minimise your and your brother's tax liability.


Telling the bank is not necessary: their contract with you does not say you need permission for anyone else to live there.

But you do need to tell your insurance company, and even with your brother there it's likely they will want you to have landlord insurance not just ordinary house insurance.

dori_dormer

dori_dormer wrote: »

You'd be surprised what revenue notice. You definitly won't qualify for rent a room scheme if you are gone a year or more. You must live in the property to qualify.

The other issue that popped into my head there was also gift tax. Technically renting below market to a relative is essentially gifting them money. Your brother may be liable to tax on this. 500 a month would definitly be over the yearly allowance I think.

I'd try and contact a tax consultant and tell them what you are planning to maybe do, and ask their opinion on the matter and where you might fall into tax trouble.

Another reason to "technically" rent a room rather than the entire apartment (even though his brother will really have the entire apartment).

I see no reason why the rent a room scheme can't be used here. The house is still the op primary residence and he will still be tax resident in Ireland while travelling. Maybe just come home for a short period between year 1 and year 2 or better again come home now and again over the time you are gone.

To be honest when it's your brother ye should be well able to figure something out here to make this all work out nicely.......

dori_dormer

Darrell Wonderful Screwball wrote: »

Another reason to "technically" rent a room rather than the entire apartment (even though his brother will really have the entire apartment).

I see no reason why the rent a room scheme can't be used here. The house is still the op primary residence and he will still be tax resident in Ireland while travelling. Maybe just come home for a short period between year 1 and year 2 or better again come home now and again over the time you are gone.

To be honest when it's your brother ye should be well able to figure something out here to make this all work out nicely.......

I'm not 100% on primary residence situation. But unless he spends 6 months out of each calander year in ireland, he is not tax resident. There are some loopholes regarding previous year time spent in ireland, and intention to stay length when you come back, but simply returning for xmas for a week or whatever does not make you tax resident.

Similarly with the rent a room scheme the owner has to actually sleep in the house a certain % of the time to comply with it.

dori_dormer

dori_dormer wrote: »

I'm not 100% on primary residence situation. But unless he spends 6 months out of each calander year in ireland, he is not tax resident. There are some loopholes regarding previous year time spent in ireland, and intention to stay length when you come back, but simply returning for xmas for a week or whatever does not make you tax resident.

Similarly with the rent a room scheme the owner has to actually sleep in the house a certain % of the time to comply with it.

Well it is 100% your primary residence if you are travelling around, how can it not be.

As for having to sleep in the house a certain number of nights there is no such rules it has to be the house where people would normally except to find you, you are just on a long holiday.

Again it's with his brother so this could easily all be kept "in-house" without much difficulty.

Man11

Darrell Wonderful Screwball wrote: »

Well it is 100% your primary residence if you are travelling around, how can it not be.

As for having to sleep in the house a certain number of nights there is no such rules it has to be the house where people would normally except to find you, you are just on a long holiday.

Again it's with his brother so this could easily all be kept "in-house" without much difficulty.

I agree with that

Mrs OBumble

Darrell Wonderful Screwball wrote: »

Well it is 100% your primary residence if you are travelling around, how can it not be

Pretty easily and the Immigration people will likely have documents to prove it.

athtrasna

Suggestions/hints about defrauding Revenue are not welcome on this forum

Mod

Mrs OBumble

Mrs OBumble wrote: »

Pretty easily and the Immigration people will likely have documents to prove it.

If you are moving from hotel to hotel and hostel to hostel your house in Ireland is your primary residence simple as that.

Posters in this forum really like to complicate very simple simple situations.

If you were travelling every week for business living in hotels and only spending an odd night in your home then it's your primary residence so why not when you are travelling for pleasure?

yqtwqxqm

Ive done this with my brother.
He can buy you your flights or whatever you want as a present for going away.
It might be just coincidence that the present is worth the same as the yearly rent you want to get off him.
Then you pay him a nominal sum to mind your house while you are away. Or a nice present when you get home.
You dont ask him to move in, though if he feels it necessary to stay there to mind it thats up to him.