buying second property for investment purposes

Do we need to formally notify Revenue of the gifting? Or is it declared if there's an investigation?

The €3k yearly gift exemption allows a gift of €3k be given with no tax liability. It has no bearing on the tax liability.

If the market rent is €15k for example. The child is receiving a gift of €12k. Now this can be deducted from the lifetime inheritance allowance of category A and pay no tax until the threshold limit is reached. If the child has a partner then they are category C for inheritance purposes.

The parent has no tax liability as they have not received any income.

It has been a while since I looked at this but I don't think the tax laws have changed although I will stand corrected.

Why would you post if you don't know how things work.

Mortgage interest is 100% allowable as an expense for a landlord on rental income on an investment property.

Could you not just take it as your main residence after tenants move out, register all utilities in your own name. Your wife keeps the other house as hers.

Daughter lives with you in your residence.

My understanding is a tax liability for a LL arises where they receive a rental payment. No rent no tax liability as in this case the parents would not be getting a rental payment.

The daughter has a tax liability for the rent. However she can offset his yearly gift allowance against it it's explained here

It also stipules where a child is u25 and in full-time education no liability arises

Am I correct saying that the 3k a year tax free gift doesn't go against the lifetime of what you can gift a child.?

So you can gift 3k a year and surpass the 335 k lifetime threshold.

Article looks interesting. Pity it's not accessible :(

You are correct.

My story was the same as yours, until it wasnt :)

well over decade charging low enough rent (I couldnt raise it anyway with the RPZ, but before RPZ it was my choice to charge a reasonable rent and leave it low for good tenants which i did.) Everything went well for over a decade. Suddenly one bad tenant changed everything. We decided when they left that we had been unlucky (They seemed so nice and had great references, jobs etc. Dream tenants actually - until they werent) so we decided not to sell at that point and rent again. Another dream tenant turned out to be 10 times worse than the first. After they went we decided to sell, but a colleague asked could they rent the apartment. They have left to go home to their own country now and we just decided after they left we were going to sell up so its ready to go on the market now next month and we are out.

Did the sums and we will get out with a decent profit at least. Going forward it would be impossible to make a profit and the risk far outweighs any potential to imporve the profit for what we would be at now when we sell. So we decided why take on the risk for so little reward, but also potential disaster? It was time to get out for us.

It remains to be seen if the RPZ locked rent will have an effect on the price we get. Its locked a fair bit below the market rate in the area.

Why would a buyer know what rent you were getting?

It's the law now you cannot rent a house for more than it was previously rented for in an RPZ+2% or inflation whichever is lower. Outside RPZ's you have to show a higher market rent to increase rent.

Therefore Investors buying in an RPZ areas look for a rental certificate when they buy a house that was rented in the previous two years

The interaction was with a poster who wished to buy a house for his daughter to live in. Normally an investor would steer clear of properties with low rents, it this case from a tax perceptive it would make sense to buy one.

I see you are an economic genius from you interaction on this thread.

You asked a question you got the reason and you could not apply it to understand the reason for it being given

At present lower rental return properties are exiting the market, generally they are bought by owner occupiers as an investor will not touch with a twenty foot pole

im on a tracker, so for the last few years this was near zero ,expenses usually come to a small amount per year also

Ah sure anyone can become a landlord. Buy an an where the payments are €1200pm. Change the mortgage length to suit. Charge €1500pm. People have been missing out on this free money for years :)

The purpose of the rent is to cover expenses such as maintenance, mortgage interest etc. AND to provide a return on the capital invested in the property. Price appreciation may provide some return on that, however over the last 20 years that return is less than inflation, negative in real terms (and that estimate is before the massive recent inflation). Obviously people can pick a buy in date around when the market was at historical lows in 2013 (and reflecting a drop miles bigger than just about any other country house price index) and claim the price growth is huge but if you look at a long term plot of Irish house price index going back 20 years you get a clearer picture. Maybe in your analysis you are confusing Ireland with a country that has a more stable house price index with a better long term yield.

So some of the yield on the investment can be expected to come from the rent to make up for the negative real yield and to make the return on investing in any way attractive long term (and even at current rents it isn't attractive, small landlords are flooding out). The equity in the place is increasing from some of the rent and normally also from money the owner has to add themselves to cover the mortgage. The portion of the rent that pays down equity is taxed at 52% for higher earners before paying off the mortgage, so both landlords with a BTL mortgage and renters are getting a bad deal on this, REITS are not subjected to this tax.

Even with the post tax contribution/return generated by some of the rent paying down equity, the return on property in Ireland if you have a BTL mortgage is just not attractive relative to other interest yielding options now.

People who don't understand what is involved may be wondering where all the 'high' rent goes, it's mostly on tax and mortgage interest (plus other expenses, service charges maintenance etc.). The bank and the government are the ones getting the majority of the rent. The government could help by introducing tax breaks to encourage people to stay invested, but they would rather charge the full tax so they can pay for budget giveaway gimmicks, like double child benefit etc. to buy votes.

This is very well summed up.

Unfortunately many people don't understand this and "tax breaks for landlords" isn't a popular policy.

I understand it perfectly. It is the landlords on boards that moan that the rent barely covers the mortgage that don't understand the relationship between a mortgage and rent - or the lack of a relationship.

Let me dumb this down for you. I know I am coming across as a prick but the level of mis information here is just nuts. If you can counter my argument please do.

Buy a house for 100k at 0% interest(keeping it simple) over 10 years. You rent it out at 10000 at year and pay half in tax.

Repay the mortgage over 10 years. Assume no change in house price. You sell up at the end. Get your 100k back. You now have 125k. Profit of 25k even though rent never exceed the mortgage repayments.

So even though your income after tax was only half the mortgage you still made a profit because buying the property cost you €0 - because interest was zero.

Of course there are a ton of other things that need to be accounted(like a real interest rate) for but if you cannot wrap your head around that core principal then the rest will confuse you no end.

Im sorry but you dont have a clue. That rant just makes it crystal clear at this point.

Let me make it simple for you.

I take out a 10 year interest only mortgage of 100k and the rent pays the interest only as you seem to suggest is a fair deal.

I owe the bank 100k.

I go to sell the property after 10 years to pay the bank back and it's like 2009 all over again and prices halved - I get 50 k.

I pay the bank the sales proceeds less selling fees of 7k and now I still have a 57k mortgage and no poperty - genius!

The Paddy Power business model for landlords.

If a property is projected to depreciate over the lifetime of the mortgage then that needs to be factored into the rent as I explained in an early post.

Yes, I'm starting to realise I should have come to you all along for investment advice, I'd be so much better worse off!

Same to you dude!

What's really scary is that all of our political parties are basing their rental market policies around winning this guy's vote.

Imagine not knowing what dumb it down actually means...

I will let you two to your echo chamber.

I've a question that seems to fit in this thread.

So, currently I've a small mortgage of about 40k on a small house worth about 150k.

We've a deposit of 40k right now.

Im trying to decide if I should/even can get a new mortgage on a new house which would become our primary residence while keeping the current house. New house is around 300k. We'd be hoping to avail of the new 10% rule for 2nd time buyers.

We'd probably rent the current house to the council for 10 or 20 years at 80% market rent. 80% market rent would cover the mortgage and have a couple of hundred left over even with 50% tax on it. Council would cover any issues or maintenance expenses on the house and would pay even if there was issues with tenants and non paying tenants.

The questions I have are

1. If the new house was going to be our primary residence, would the new mortgage rules mean that the deposit is 10% even if we keep our other house? I thought I read somewhere that the deposit would need to be 20% in this scenario when the changes were reported but can't find it now they've come into effect.

2. How likely would the bank be to give a 2nd mortgage in this situation? Luckily, our incomes would be decent. 3.5 times our income would cover the cost of the new house and what's owed on the current house with a bit to spare.

3. Is this a stupid idea?