Moving Abroad house rental question

Panch18

Need some advice here

My girlfriend has owned a property in Ireland for 3 years and is currently availing of the rent a room scheme.

She has a job opportunity in a EEA (not EU) country which she will be taking. This means that she will not be an Irish tax resident for next 3-5 years.

however she wants to keep the house and keep the current tenants in the house.

She will also be using the house herself as she will be working in Ireland 1 week per month

So my questions are:

1. Does this need to be registered with the PTRB
2. What are the tax implications if no registration necessary
3. Do we just ignore the fact that she is going to be there 1 week per month for revenue purposes?
4. I assume as a non tax resident rent a room doesn't apply
5. She will want to be able to offset mortgage interest and bills against the rental income for tax purposes - bills and interest should nearly offset the rental income so it will probably be a break even situation roughly

thanks for any advice or guidance

Claw Hammer

This is a thoroughly messy situation. From a Revenue point of view, as she is not tax resident, they are unlikely to accept that she is ordinarily resident in the house so therefore she won't qualify under the rent a room scheme.
Unless she registers with the RTB, she may be excluded from mortgage interest relief.
If she registers with the RTB, her lodgers will become tenants with Part 4 rights. It is also possible that the RTB may consider that she is in fact living in the house if she is there one week a month and therefore the Residential Tenancies Act does not apply and she shouldn't be registered at all.

Panch18

Claw Hammer wrote: »

This is a thoroughly messy situation. From a Revenue point of view, as she is not tax resident, they are unlikely to accept that she is ordinarily resident in the house so therefore she won't qualify under the rent a room scheme.
Unless she registers with the RTB, she may be excluded from mortgage interest relief.
If she registers with the RTB, her lodgers will become tenants with Part 4 rights. It is also possible that the RTB may consider that she is in fact living in the house if she is there one week a month and therefore the Residential Tenancies Act does not apply and she shouldn't be registered at all.

Thanks for taking the time to reply Claw

As you say a thoroughly messy situation alright

My incline is to tell her not to mention to the PTRB that she is infact using the house on a monthly basis - but I am unsure of any consequences for this

The_Conductor

At the moment her rent-a-room housemates- are licencees- not tenants- however, if your girlfriend registers them as a tenancy- they gain significant rights- including but not limited to- the right to peaceful enjoyment of the property- aka your girlfriend would most certainly *not* be allowed to stay there for a week every month- even popping in would be viewed as a breach of the tenants entitlement to peaceful enjoyment of the property.

In addition- the rental income would be subject to both Irish tax (at 20%) and tax in the EEA country which she is ordinarily resident in for tax purposes (though she could offset her tax on her Irish income against the EEA tax due on it. Keep in mind- if the EEA country was Norway, for example, her Norwegian tax on her Irish rental income could be up to 55% (and she might not necessarily be allowed the same deductions as she is here- I'm not sufficiently familiar with their tax code to say).

Your girlfriend needs to spend a little bit of money- visiting an independent tax consultant- to get a clearer picture of what her options, and what the consequences of those options, might be- preferably one with at least a half decent knowledge of the tax code for the country in which she is going to be tax resident.

Btw- your girlfriend could in theory continue to claim a tax residency here- subject to certain rules which I'm not going to go into here- it is plausible though that she could remain an Irish tax resident for at least a large chunk of her three years abroad (which would entitle her to the rent-a-room scheme for the relevant duration in which she kept this status).

She needs good professional advice though.

Claw Hammer

The_Conductor wrote: »

At the moment her rent-a-room housemates- are licencees- not tenants- however, if your girlfriend registers them as a tenancy- they gain significant rights- including but not limited to- the right to peaceful enjoyment of the property- aka your girlfriend would most certainly *not* be allowed to stay there for a week every month- even popping in would be viewed as a breach of the tenants entitlement to peaceful enjoyment of the property.

.

There is no reason why she cannot reserve the right to use one room, which is not comprehended by the tenants lease. The problem is that the RTB has been quite inconsistent in dealing with these situations. If they accept that they are licensees, the problem is they won't register the tenancy. That creates an issue with the Revenue. It is an unregistered residential landlord allowed interest relief in circumstances where the letting cannot be registered? The Revenue may choose to deal with it like Air Bn B. Again, there is very little known as to how this situation might be dealt with by the Revenue.
Professional advice is critical.