Rental income question

Tusky

Hypothetical situation.

You buy a house using the first time buyers deposit of 10% but continue to live in rented accommodation and rent out the house you bought on airbnb.

Do you have to pay tax on 100% of your airbnb income? Or can you use the income to pay off the mortgage, and other expenses within the house, and just pay tax on the profit?

And I assume if any of your income from your regular job is taxed at the top rate then all of your rental income is taxed at higher rate?

Thanks.

Askthe EA

Tusky wrote: »

Hypothetical situation.

You buy a house using the first time buyers deposit of 10% but continue to live in rented accommodation and rent out the house you bought on airbnb.


Thanks.

I think your bank will have an issue with this as you are NOT an owner occupier. By to let mortgages have a higher deposit requirement than owner occupier mortgages.

Michael D Not Higgins

Mortgage payments are a capital cost and not a business expense. They are not deductible for tax purposes.

Graham

Askthe EA wrote: »

I think your bank will have an issue with this as you are an owner occupier. By to let mortgages have a higher deposit requirement than owner occupier mortgages.

and higher interest rates

jimmycrackcorm

Hypothetically it's also 2006.

Tusky

Michael D Not Higgins wrote: »

Mortgage payments are a capital cost and not a business expense. They are not deductible for tax purposes.

Thank you. What about other household expenses?

Askthe EA wrote: »

I think your bank will have an issue with this as you are NOT an owner occupier. By to let mortgages have a higher deposit requirement than owner occupier mortgages.

What if you lived there some of the time?

Gumbo

Tusky wrote: »

Hypothetical situation.

You buy a house using the first time buyers deposit of 10% but continue to live in rented accommodation and rent out the house you bought on airbnb.

Do you have to pay tax on 100% of your airbnb income? Or can you use the income to pay off the mortgage, and other expenses within the house, and just pay tax on the profit?

And I assume if any of your income from your regular job is taxed at the top rate then all of your rental income is taxed at higher rate?

Thanks.

Profit is calculated at everything above 80% of the interest portion.

So simple example,

Mortgage payment 1000
Of that 1000, 500 is interest and 500 pays the loan
Rental income is 1000 (just to keep it simple)

Profit is calculated as €600 as the interest portion is only 400 (80%).so you pay full tax and USC on €600 even though you have no extra cash as such from the rent.

There are standard allowances or expenses allowed.
Have a quick chat with a tax consultant. Give him your details, tell him the mortgage and interest rate and he will tell you a projection of tax due. You can then see if it's worth it or not.

awec

I think you would also need planning permission if you are going to let the house out on AirBnB as it's a change of use.