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Renting Home - Getting Mortgage For Rental

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  • 29-06-2021 10:19am
    #1
    BlackEdelweiss
    Registered Users Posts: 1,535 ✭✭✭


    My mother has offered to give us a deposit for a mortgage however with the market the way it is now we cant find a decent property. I was thinking of buying a 1 or 2 bed apartment with the deposit and paying the mortgage from any rental income we get from it. I am not looking to make a profit from it, it is more just a placeholder for the deposit.
    Is there any benefit to doing this?
    Can I get a regular mortgage and not say it is for rental given that I dont have an mortgage at the minute or do i have to go for a buy to let mortgage?


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    #2
    Wildly Boaring
    Registered Users Posts: 3,646 ✭✭✭Wildly Boaring


    If you are employed and in the upper tax bracket you will pay full income tax, PRSI and USC on the rental income (less allowable expenses) before you get to pay the mortgage.

    If you ever sell the apartment you will pay capital gains tax on any profit from sale.

    You will use up any first time buyers allowances or grants now or in the future on this property


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    #3
    ted1
    Registered Users Posts: 23,515 ✭✭✭✭ted1


    You’ll need a 20% deposit for the next place.

    You’ll need to pays taxes and management fees. You may need to replace flooring , paint the unit. Buy new appliances, and furnish the place.

    You could get a tenant who refuses to pay rent or move out.
    You could get a tenant that destroys the place

    The place could be empty for a while.
    The value could decrease , if it increases and you sell you lose 33% of any gain in taxes.


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    #4
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Where are you living at the moment?

    Could you buy a two bed apartment and live in it for a few years, then sell and trade up / or maybe look at renting it out then?


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    #5
    _Brian
    Registered Users Posts: 18,564 ✭✭✭✭_Brian


    BlackEdelweiss wrote: »
    My mother has offered to give us a deposit for a mortgage however with the market the way it is now we cant find a decent property. I was thinking of buying a 1 or 2 bed apartment with the deposit and paying the mortgage from any rental income we get from it. I am not looking to make a profit from it, it is more just a placeholder for the deposit.
    Is there any benefit to doing this?
    Can I get a regular mortgage and not say it is for rental given that I dont have an mortgage at the minute or do i have to go for a buy to let mortgage?

    Been renting out a property for 15 years.

    It’s a mugs game. Between mad tax on the income and crappy tenants, ridiculous legislation providing cover for non paying tenants.

    It’s no wonder landlords are selling out. We’re selling after current tenants move out amd they are good tenants, it’s just not worth it.


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    #6
    Iscreamkone
    Registered Users Posts: 871 ✭✭✭Iscreamkone


    Or buy an apartment and rent a room out, and pay no tax on rental plus no CGT when selling?


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    #7
    C14N
    Registered Users Posts: 2,656 ✭✭✭C14N


    BlackEdelweiss wrote: »
    My mother has offered to give us a deposit for a mortgage however with the market the way it is now we cant find a decent property. I was thinking of buying a 1 or 2 bed apartment with the deposit and paying the mortgage from any rental income we get from it. I am not looking to make a profit from it, it is more just a placeholder for the deposit.
    Is there any benefit to doing this?
    Can I get a regular mortgage and not say it is for rental given that I dont have an mortgage at the minute or do i have to go for a buy to let mortgage?

    I don't follow the scenario. So you have a deposit as a gift from your mother, but it's not enough to get to 10% the value of a property you actually want, is that it? You can only afford to get a small apartment that you would like to rent out?

    Why not just live in the apartment? Where are you living now? Honestly, being an individual landlord seems like a bit of a sucker's game in this country tbh. Many risks and very few rewards given high levels of tax on rental income and capital gains from the underlying asset.

    If instead you bought a 2-bed as your primary residence, and rented out the second room, you can take home €10k from that rental income tax-free, which you can use to help pay off your mortgage payments. You'd also be keeping a closer eye on your property and your tenant so you'd know they weren't destroying the place on you. Not sure what laws are like in this scenario but I can only assume its easier to evict a problem or non-paying tenant from your primary residence than from a property that is the tenant's primary residence. You'd pay no capital gains if you sold it later in a few years. I don't know much else about your circumstances but if this is an option I'd say its a no-brainer compared to just trying to buy a place to rent it out.

    If it's not, and you only want to live in somewhere bigger, then take the deposit money from your mother and invest it. Save up and add into the investment fund over the long term until you get enough saved up that you can actually use.


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    #8
    BlackEdelweiss
    Registered Users Posts: 1,535 ✭✭✭BlackEdelweiss


    Not first time buyers, owned our own home between 2003 and 2013. Sold for a loss when we had to emigrate. Moved back to Ireland after 6 years abroad.
    We could afford a 20% deposit on a modest house but they are all snapped up and going for well above asking price.
    It was just a thought, does not appear to be worthy of further consideration though. Thanks for the advice.


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