Changing Investment Property to PPR

thewiseowl12

Hi,

Hoping someone might have gone through a similar problem - I'm not looking for legal advice!

Essentially, I have a mortgaged property in Dublin that I live in as my PPR, whilst spending some of the week down the country with my partner in her rental property. My partner is looking to purchase a property in the countryside with a joint mortgage with both our names (we are not married).

However, it appears one of the two properties has to be designated as an investment property (for the bank), which is fine, and the Dublin property makes sense as the one to be redesignated as an investment as the outstanding mortgage will be lower.

However, I will still be spending the majority of the working week in Dublin, so I would like to keep the property as my PPR, principally for claiming the rent a room relief.

Is this possible or has anyone gone through this process with Revenue?

Thanks

Samuel T. Cogley

That makes no sense to me. You want two houses one as a PPR the other as a weekend home, it's not an investment property, plenty of people do that. As for which is your PPR it's not something you have to declare, it's just the property you'd be expected to be found at, where your mail goes etc.

An investment or BTL mortgage will have an eye watering APR. ?Have you spoken to a broker to see if they can give you some guidance on which banks to try?

thewiseowl12

Many thanks for your reply Samuel.

The property we wish to purchase will be the PPR of my partner, with whom I will jointly be on the mortgage, and which will ultimately in future be our family home. Mortgage here will be 2.5x

The other is one I have a preexisting mortgage on which is my PPR at present, mortgage is currently x.

So if I am to designate one as an investment property from a bank point of view, the dublin one makes sense from an interest rate point of view. As I will be spending 5 days a week there I think I can still claim its my PPR for revenue purposes.

However, what happens the other property - my partner will have that as her PPR, but will my portion be classed as an investment property (if we sold it?)

lawred2

thewiseowl12 wrote: »

Hi,

Hoping someone might have gone through a similar problem - I'm not looking for legal advice!

Essentially, I have a mortgaged property in Dublin that I live in as my PPR, whilst spending some of the week down the country with my partner in her rental property. My partner is looking to purchase a property in the countryside with a joint mortgage with both our names (we are not married).

However, it appears one of the two properties has to be designated as an investment property (for the bank), which is fine, and the Dublin property makes sense as the one to be redesignated as an investment as the outstanding mortgage will be lower.

However, I will still be spending the majority of the working week in Dublin, so I would like to keep the property as my PPR, principally for claiming the rent a room relief.

Is this possible or has anyone gone through this process with Revenue?

Thanks

There is no such designation as 'investment' property!? Unless you mean buy to let? And it's called buy to let for a reason. You're supposed to let it out. Not sure you can claim rent a room relief on a BTL?

It certainly can't be classed as BTL and PPR at the same time.

thewiseowl12

Thanks lawred2.

To clarify, the bank are insisting that one of the properties is on a buy to let mortgage, regardless of which I live in.

However, just because the bank class it as a BTL doesn't mean that its not my PPR. Its bank protocol that one has to be classified as a BTL and this gets a different interest rate.

Your PPR would be where you are expected to be found, which is the Dublin property.

Thanks

Samuel T. Cogley

I'm still completly confused as to why your bank is insisting one of these properties is on a BTL. Have you tried other banks?

lawred2

you seem to have answered your own question then

lawred2

Samuel T. Cogley wrote: »

I'm still completly confused as to why your bank is insisting one of these properties is on a BTL. Have you tried other banks?

Fairly normal I would have thought for the purchase of a second property...

Presume going with other banks would mean that the second property would have to be considered the BTL property. And any changes to the mortgage on the existing property would require remortgaging. Maybe going with the OP's current mortgage provider allows for the much simpler option of 're-designating' and setting a new interest rate on the existing mortgage.

Maybe I'm wrong.

Samuel T. Cogley

lawred2 wrote: »

Fairly normal I would have thought for the purchase of a second property...

Presume going with other banks would mean that the second property would have to be considered the BTL property. Maybe going with the OP's current mortgage provider might allow for the much simpler option of 're-designating' and setting a new interest rate on the existing mortgage.

Maybe I'm wrong.

Well I ahem, didn't *have* to designate my 'other' property as a BTL but then...

The only reason I can see for a property to be designated a BTL is the bank is expecting an income from it and are using that income in their borrowing calculations.

lawred2

Samuel T. Cogley wrote: »

Well I ahem, didn't *have* to designate my 'other' property as a BTL but then...

The only reason I can see for a property to be designated a BTL is the bank is expecting an income from it and are using that income in their borrowing calculations.

How'd you manage that then

thewiseowl12

Lawred2 - I guess I have answered my own question in terms of PPR.

I'm just not sure what happens the second property then if we sell it.

If we sold the second property, for my partner will the house be classified as her PPR, on say half the property, as she lives there all the time, and my portion, say the other half, will be classified as an investment?

Of course if we were to get married then one house would have to be both our PPRs, which would have to be the country one.

Samuel, I'm all ears if you can elaborate on how you obtained mortgages on two separate homes without doing this? My bank manager (AIB) told me I'd have to redesignate one, I also know my sister in law had to do similarly in dealing with Permanent TSB (changed from PPR to BTL) and KBC(new PPR)

Fian

Go to a different bank. do not designate your PPR as an investment property. Do not designate your other residence as an investment property - assuming your partner is going to live there and it is going to be your joint residence?

Tell the bank "thanks but I will go elsewhere."

As regards whether the joint property will be treated as a PPR - it is a self declaration system so you will have to declare whether it actually was your PPR during the period, or whether it was hers. I can't see any reason why she would not be able to claim PPR relief on her portion of the gain while you declared a CGT liabilitiy on yours. If you were to claim PPR relief on your portion be aware that you will not be able to claim PPR on the other property for those years.

You decide your PPR on an annual basis - so this is a question that can evolve over time.

edit: You can have more than one private residence. Otherwise there would be no need for the first P (principal) in PPR.

Samuel T. Cogley

lawred2 wrote: »

How'd you manage that then

Easy see Fian's answer :pac:

Two different banks basically, although there is still the issue of is the OP declaring one as BTL so the income is taken into account. If so, that's a tad naughty and he would have to declare the property a BTL to any bank.

caviardreams

Fian wrote: »

Go to a different bank. do not designate your PPR as an investment property. Do not designate your other residence as an investment property - assuming your partner is going to live there and it is going to be your joint residence?

Tell the bank "thanks but I will go elsewhere."

As regards whether the joint property will be treated as a PPR - it is a self declaration system so you will have to declare whether it actually was your PPR during the period, or whether it was hers. I can't see any reason why she would not be able to claim PPR relief on her portion of the gain while you declared a CGT liabilitiy on yours. If you were to claim PPR relief on your portion be aware that you will not be able to claim PPR on the other property for those years.

You decide your PPR on an annual basis - so this is a question that can evolve over time.

edit: You can have more than one private residence. Otherwise there would be no need for the first P (principal) in PPR.

OP - you legally cannot have two PPRs as you would run into difficulties with capital gains tax when it comes to disposal. I think you need legal/tax advice on this tbh.

davindub

thewiseowl12 wrote: »

Hi,

Hoping someone might have gone through a similar problem - I'm not looking for legal advice!

Essentially, I have a mortgaged property in Dublin that I live in as my PPR, whilst spending some of the week down the country with my partner in her rental property. My partner is looking to purchase a property in the countryside with a joint mortgage with both our names (we are not married).

However, it appears one of the two properties has to be designated as an investment property (for the bank), which is fine, and the Dublin property makes sense as the one to be redesignated as an investment as the outstanding mortgage will be lower.

However, I will still be spending the majority of the working week in Dublin, so I would like to keep the property as my PPR, principally for claiming the rent a room relief.

Is this possible or has anyone gone through this process with Revenue?

Thanks

Rent a room and PPR relief are separate.

If you have two properties held not for investment reasons you must declare one to be your PPR for capital gains reasons within 24 months of acquiring the 2nd property. The relief obviously worth 33% of the gains since you bought ( a tax advisor will work out the indexing, enhancement expenditure etc). You should keep this as your PPR even though you will pay more interest (presumably) on the higher mortgage.

The rent a room relief applies to the property where you would normally expect to be found, not necessarily your PPR, but be ready for some sort of correspondence on the matter, you will need to convince an inspector at some stage that it is legitimately claimed.

jamesthepeach

Bank is just chancing their arm.to get more money out of you. Go to a broker and get yourself some options that don't needlessly throw money when into your banks coffers.