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Get rent in cash or through bank?

  • 29-12-2016 6:31pm
    #1
    cormie
    Registered Users, Registered Users 2 Posts: 20,836 ✭✭✭✭


    Hi folks,
    My friend has recently gone from being a leaseholder on a rental property to getting their own place. The 2 tenants moved into the new place and are paying a combined rent of circa €9,000 per year, so well below the what I think is now €14,000 Rent a room scheme.

    I was suggesting that since no tax needs to be paid on this, they may as well just do all transactions via the bank and that this would also show that they have more income and more income sources so would bode well should they ever want to take out a loan etc.

    They were of the opinion that banks would look more favourably on them if there was no sign of rental income, that the bank would see they are able to pay their mortgage and bills etc, just with the money from their salary.

    They weren't really willing to listen and were convinced they knew the deal after having applied for several mortgages in the last year or two.

    Can anyone advise which option would banks look more favourably on:

    1) Having all transactions go through the bank
    2) Getting cash for rent and spending it for things like groceries or work that needs doing in the house?

    If it is better to have more income sources showing on the account and more transactions when it comes to getting a loan, is there any other advantages to getting the rent in cash at all?

    Any feedback would be appreciated


Comments

  • #2
    Denny_Crane
    Closed Accounts Posts: 384 ✭✭Denny_Crane


    It still needs to be declared.

    Top tip I was given is don't use the money for day to day essentials. Save it and use it for projects/holidays. It makes the pain of sharing a space much less IMO!

    Slightly odd that they have their own place and are still looking for a mortgage. Sounds like more of a house sharing arrangement/sub-lease which would surely be looked at the same way by a bank? I'll defer on that one.


  • #3
    cormie
    Registered Users, Registered Users 2 Posts: 20,836 ✭✭✭✭cormie


    They already got their mortgage and are now in their own place, just in the last few weeks. I just meant that they had applied for several mortgages in the last year or so.

    I'm not sure what you mean makes the pain of sharing a space less? Going on holidays and escaping for a while you mean? :)

    What can happen if they don't declare the cash they get for rent and how likely is this to happen?


  • #4
    Denny_Crane
    Closed Accounts Posts: 384 ✭✭Denny_Crane


    cormie wrote: »
    They already got their mortgage and are now in their own place, just in the last few weeks. I just meant that they had applied for several mortgages in the last year or so.

    I'm not sure what you mean makes the pain of sharing a space less? Going on holidays and escaping for a while you mean? :)

    What can happen if they don't declare the cash they get for rent and how likely is this to happen?

    If you're relying on the money you find it more grating I find. The ability to go ah there new car, new kitchen or nice holiday makes up for having to speak to someone before my morning coffee.

    If they don't declare it, it becomes liable for income tax. Why they wouldn't declare it is beyond me.


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