Renting out my house

cruais

Looking for some advice re renting my house

I live in a 3 bed house, 1940s, Dublin north central. I would like to rent it out, while we move to rent a bigger property ourselves. Since our little boy has come along, I find it quite cramped.

Potential rent on my property is 2 - 2.1k p/m.

Where do I start in all of this in terms of tax etc

Lumen

You will probably be worse off than if you just sold up and bought a new place since you'll pay income tax on the rent and CGT on any gains in property value.

There are many variables, e.g.

- Current house value, outstanding mortgage amount and mortgage interest rate
- New house value, new mortgage interest rate (you may lose cheap finance e.g. tracker)
- New house rent
- Whether your current mortgage terms would require you to remortgage with an investor interest rate if you rent it out

Denny_Crane

Firstly make sure the property meets the minimum standards for rental.

http://www.citizensinformation.ie/en/housing/renting_a_home/repairs_maintenance_and_minimum_physical_standards.html
Get the proper insurance researched
Speak to your mortgage provider (if applicable).

Assuming you earn over the lower rate, tax will be approx 50% of your rent, less anything you can claim for expenseswise.

Do plenty of research and make sure you are well covered for voids which could be as much as 18 months of people not paying rent + associated legal fees. You will no be able to move back in or sell on a whim and it could, potentially, be years that you're stuck in a less than ideal situation.

handlemaster

OP is going to have an eye opener..... will you update the thread in a years time let us know how its gone ?... best of luck, your going to need it...thats been realistic

riclad

You can claim 75 per cent of loan interest, and basic expenses against tax, accountants fees, agents fees , maintenance expenses ,insurance .say you rent in 2017,
in september 2018 send in a tax return form 11.
see www.revenue.ie landlord expenses

athtrasna

riclad wrote: »

You can claim 75 per cent of loan interest, and basic expenses against tax, accountants fees, agents fees , maintenance expenses ,insurance .say you rent in 2017,
in september 2018 send in a tax return form 11.
see www.revenue.ie landlord expenses

It's 80% of mortgage interest now. Changed in the last budget

Denny_Crane

athtrasna wrote: »

It's 80% of mortgage interest now. Changed in the last budget

Nice! Bit of good news to end the working day on! Thanks.

NIMAN

www.irishlandlord.com is a valuable site for the would-be landlord.

Bigus

Lumen wrote: »

You will probably be worse off than if you just sold up and bought a new place since you'll pay income tax on the rent and CGT on any gains in property value.

There are many variables, e.g.

- Current house value, outstanding mortgage amount and mortgage interest rate
- New house value, new mortgage interest rate (you may lose cheap finance e.g. tracker)
- New house rent
- Whether your current mortgage terms would require you to remortgage with an investor interest rate if you rent it out

Or a simpler way of saying the same .thing is , you can sell your current house now and keep all the money ( after borrowing paid off ) for yourself tax free.

Once you start renting it , revenue starts claw backs , even on the bit that is now tax free.

Another thing to consider is that although the current rents are 2k plus , who can afford this on a sustainable basis? in other words you could get loads of people putting their hands up to rent the house , but once they settle in they might decide not to pay up and there's féckall in reality you can do about this these days to get them out, hence the current housing crisis, landlords getting out big time .

newacc2015

OP I would honestly sell it unless you have a tracker mortgage that you want to keep. It doesn't make sense to pay tax on rental income to then rent somewhere else. There is the risk of non-paying tenants. Plus since the part IV 4 year limit is gone and Government likes to change the rental laws every 2 years. In a few years it is possible you might not be able to move into the house.

I don't see how you will get €2,000 to €2,100 for a cramped 3 bedroom unless you are willing to make the living an additional bedroom and rent it to students. If it was built in 1940's I'll hazard a guess its a former corpo aka council house. They are pretty small and I don't think they will command that strong rent unless it is really nice.

I would sell up and find a property that suits your current needs. Mortgage interest rates are cheap at the moment. You dont have the massive stamp duty expense which was a massive deterrent to buying a few years ago.

I honestly dont think you realise how difficult and annoying it is be a landlord. It is not as simple as filling out a form with revenue as most people think.

cruais

Thank you all for the above comments.

Yes it is an 1940s ex corpo house. We completely modernised it when we bought it 7 years ago and upon research of the area and the same style house (im assuming due to being so central), 2 - 2.1k p/m seems to be the going rate.

I would preferably love to sell, however, I have the fear that we wont get a mortgage again due to my husband loosing his job to redunancy last year. This was right in the middle of my pregnancy. We therefore fell behind in mortgage repayments and have got the repayments down from a couple of grand to a couple of hundred. (My husband is working again thank God).

So I figure this is our ownly way of getting a bigger house, although it doesnt sound like a pretty picture!

newacc2015

cruais wrote: »

I would preferably love to sell, however, I have the fear that we wont get a mortgage again due to my husband loosing his job to redunancy last year. This was right in the middle of my pregnancy. We therefore fell behind in mortgage repayments and have got the repayments down from a couple of grand to a couple of hundred. (My husband is working again thank God).

So I figure this is our ownly way of getting a bigger house, although it doesnt sound like a pretty picture!

Your credit rating will be perfect again after 5 years, as missed or delayed payments fall off your credit report after 5 years. That's assuming you have a mortgage with a bank that reports it to the ICB ie mortgages owned by vulture funds and EBS mortgages are not reported to ICB. You will get a mortgage again, just not that this moment

If you have your payment down to a few hundred, I am assuming you have an arrangement with your bank? Eventually they will send out an SFS again and ask for you to fill it out again. They will want you to start paying up to the few thousand a month again. Can you really afford to be paying a new normal mortgage repayment and rent?

cruais

newacc2015 wrote: »

Your credit rating will be perfect again after 5 years, as missed or delayed payments fall off your credit report after 5 years. That's assuming you have a mortgage with a bank that reports it to the ICB ie mortgages owned by vulture funds and EBS mortgages are not reported to ICB. You will get a mortgage again, just not that this moment

If you have your payment down to a few hundred, I am assuming you have an arrangement with your bank? Eventually they will send out an SFS again and ask for you to fill it out again. They will want you to start paying up to the few thousand a month again. Can you really afford to be paying a new normal mortgage repayment and rent?

Our debt was a couple of grand which we repayed ourselves and have currently got down to a couple of hundred. The bank will add this on to the end of our mortgage now instead.

Re Renting and mortgage costs. We would have to find a house that would come in under the price that we would be charging on our own house, ie to allow for tax repayments etc

Tbh, I think we will be waiting a while. Daft.ie are returning 2 properties in the whole area which we live in.

newacc2015

cruais wrote: »

Our debt was a couple of grand which we repayed ourselves and have currently got down to a couple of hundred. The bank will add this on to the end of our mortgage now instead.

Re Renting and mortgage costs. We would have to find a house that would come in under the price that we would be charging on our own house, ie to allow for tax repayments etc

Tbh, I think we will be waiting a while. Daft.ie are returning 2 properties in the whole area which we live in.

So you don't have a payment plan in place with the bank? ie they haven't given you a reduce mortgage repayment currently?

You need to factor in the €500+ you will pay for landlord insurance, LPT, repairs/maintenance, accountant fees, the fact your mortgage interest relief is capped (ie you will be paying tax to pay an expense), RTB, BER( it is of course required by law, but few landlords actually have it) etc. There a lot of hidden expenses

PierreLeCake

cruais wrote: »

Looking for some advice re renting my house

I live in a 3 bed house, 1940s, Dublin north central. I would like to rent it out, while we move to rent a bigger property ourselves. Since our little boy has come along, I find it quite cramped.

Potential rent on my property is 2 - 2.1k p/m.

Where do I start in all of this in terms of tax etc

You must really hate yourself if you want to become a Landlord.
First you need to examine your finances. How much is your mortgage costing you each month. How much of that is intrest payments which you claim 80% of against your rental income tax liability.
How much are you planning on spending on rent bearing in mind how expensive rent is nowadays. Its not easy getting a place to rent anywhere. Assuming you want to roughly live in the same area as your own home you will be paying the same in rent as you are hoping to get.
So lets say you find a place to rent you will need a months rent plus months deposit up front while paying your mortgage. Thats a big wodge of cash straight away.
You will then have to fix your house up for rental standards so the house will be empty for a while you get it cleaned up, maybe painted and get the small repairs that like most people you have ignored to date.
Will you rent it out yourself through Daft or through an Agent. An Agent will take one months rent just to get you tenants . They will charge extra to manage it for you.
You cannot claim an pre renting expenses against tax. You can claim Capital Depreciation on furniture and fittings over 8 years. You can claim accountant fees and various other expenses detailed by other Posters.
You will need a BER cert. Some landlords ignore this but I have have had potential tenants ask if the house has a BER cert.
You are asking a big price for your house so Tenants , even though desparate, will have high expectations and standards. They will expect you to fix things in the house that byou have happily lived with.
If you decide to rent the house yourself you have to interview all the prospective tenants and hope and pray that you end up with a good one.
You will need to have a cash surplus in case things go wrong . i.e the boiler packs up. A tenant paying large rent can reasonably expect this to be fixed quickly.
You need to be available to deal with problems. You have a problem, you have to find a suitable tradesman, does the time he is available suit the tenant.
These are all considerations you must take into account.
The golden rule of lanlording is that tenants will always ring you with problems at the time most inconvienient to you i.e. You are down the country at a wedding thats when the tenant will ring to say there is a leak in the ceiling.
Then there is tax. Prepare for a world of pain. Lets say you rent your house for 11 months this year at 2k per month. Thats a nice sum of 22k. Now lets say all your allowable expenses are 10k. As far as Revenue are concerned you have made a profit of 12k. They want approximately a nice 6k in tax from you. You won't have to pay this until October / November 2018 so you forget about it until it rears its ugly head next year. You scrape together the 6K in tax and then get hit with a double whammy you have n't been expecting. Not only do Revenue want the 6k for your 2017 rental income they want another 6k preliminary tax for 2018 so you have to find another 6K. The first year of renting is the worst . You get hit from all sides for money you don't have.
You need to talk to an accountant about how realistic an option this is for you.
You also face the possible doomsday situation. You are renting happily for a year, your landlord gives you notice to move out as he wants to sell up. You can't find a new house to rent. Your tenant stops paying his rent and is planning to over hold for the next year and a half. Welcome to living in a B&B while having your house repossessed because you can't pay the mortgage. I know this is an extreme scenario and unlikely to happen to you but it has happened to other Landlords.
At the moment there just appears to be 3 of you in a 3 bed house. Kids cause clutter. Even if you move to a bigger house the clutter will follow.
Is there room to extend. Are you happy where you are living. I would consider these factors first.
If you decide to be come a Landlord you automatically become a despised member of the price gouging, profiteering classes. Politician's , always striving to be popular will shaft you at the stroke of a pen without hesitating. They way things are going you may never be able to get rid of a tenant or even sell your house. And your friends won't like you because your now a rich landlord

Ms Doubtfire1

Well, there's a lot of people here that advise against it. However, if you do it right you can't go wotng frm a tenant point of view.
1) get Id's
2) get proof of income
3) get references (3 at least AND follow up by calling the LL involved)
4) Make sure the furniture is not too expensive- OR, rent unfurnished.Since you might be stuck 4-6 years , renting unfurnished can safe you A LOT of hassle - as there is nothing in the house to be damaged except the walls. If you have carpet, replace by Lino. Take pictures of all the appliances on letting date. Inspect regularly - every 3 month in the first year or until you are comfortable. i would NOT recommand hiring an agent - too many gangsters out there.

I have bno idea of taxes etc involved but that would be my approach to possible tenants. You could also go AIRbnb but I'm not sure what the implications are.

pilly

In all honesty and to be fair to OP, I would suggest you don't do it. I've done it for 2 years now and thankfully the tenants lease is up in March, after that I'm not doing it anymore. After tax and expenses it just really isn't worth the hassle. Tenants not paying, breaking stuff and ringing you to fix it, leaving a load of rubbish behind. Nightmare city. In my case I won't get another mortgage either after being out of work a couple of times in the last few years but I've given up caring at this stage. Bank can have the house. I've no attachment to it anymore.

If you have an attachment to your house could you not consider an extension? I seen an advertisement last night for some sort of extension that takes only 3 weeks?

Ms Doubtfire1

Pilly? tenant is under part 4 - if they want to stay another 2 years there's nothing you can do about it-unless you have the exemptions as listed in the tenancy act? ( need for own, use, want to sell, need for family or extended renovations?)

pilly

Ms Doubtfire1 wrote: »

Pilly? tenant is under part 4 - if they want to stay another 2 years there's nothing you can do about it-unless you have the exemptions as listed in the tenancy act? ( need for own, use, want to sell, need for family or extended renovations?)

No, they are new tenants since October. Foreign students, 6 months fixed term lease. Now in saying that if they decide they do want to stay there probably isn't much I could do anyway, given that all the rights are stacked against LL's but if they do that's their decision. I won't be making things anymore comfortable. Already paying water charges, LPT and bin charges simply because it's easier than relying on tenants to pay. Then they get on to me because the heating has to be reset because they've not topped it up for a few weeks so I've to send my son out to do a simple turn of a switch. Oh I'm just disheartened by the whole thing.

Ms Doubtfire1

oh thats horrible. Sorry i misunderstood, thought you'd rented out to one person for 2 years. Jees, i'm a tenant myself I'd never dream of having my Ll pay any utility bills. >groan< can understand why you want out.

pilly

Ms Doubtfire1 wrote: »

oh thats horrible. Sorry i misunderstood, thought you'd rented out to one person for 2 years. Jees, i'm a tenant myself I'd never dream of having my Ll pay any utility bills. >groan< can understand why you want out.

I was in Canada over Christmas and they were ringing me about the heat and couldn't understand when I was trying to explain how to reset the heating so had to send my son on a forty minute drive each way to reset it for them.

The people before them left so much rubbish I'd to get two skips and also had to replace all the beds, they were filthy. Didn't pay last months rent so I couldn't deduct anything from their deposit.