First Time Landlord Advice

tranceenigma

I am just after purchasing a 5 Bed detached hosuse in Limerick, Castletroy area.
I am about to head off of Oz in a few weeks for a year or so & plan to get it rented out, hopefully the 5 rooms.
Now I am a first time buyer & will hope to avail of Tax Relief from this also, but the only way I can do that is if my house is a private residence. I have been told the way to overcome this is keep a room aside as If one were living in it & rent out the rest, that will you will be able to avail of Tax Relief & stop the tennants from claiming Rent Relief from the Revenue.

Just wondering if anyone has been in this situation, obviously there is ways around this. But what is the best way to keep my head above water if I am in Oz.

Also its my first time renting out a house, ive always been the tennant, so I am just looking for tips in what to look out for & what type of information to get from tennants before I hand over any keys?

Afuera

johnmikedooley wrote: »

Now I am a first time buyer & will hope to avail of Tax Relief from this also, but the only way I can do that is if my house is a private residence.

Correct. Revenue will have to consider it your PPR (principal place of residence) if you want to legitimately claim the FTB exemption and relief on it.

johnmikedooley wrote: »

I have been told the way to overcome this is keep a room aside as If one were living in it & rent out the rest, that will you will be able to avail of Tax Relief & stop the tennants from claiming Rent Relief from the Revenue.

This is wrong. Tenants can still claim rent relief even if they are renting under the Rent-A-Room scheme (i.e. lodgers in the same house as the landlord) and they can do this without the consent of the landlord (or even make a back claim up to 4 years after the relevant tax year). Also note that you can only earn up to about 7,600 EUR per year through this scheme or else will have to pay tax on all of your rental income.

The big grey area on your plan is whether Revenue will still consider it your PPR while you are living in OZ. If you were there on holidays for a few months, I doubt it would be a problem. Staying they for a year or two sounds a bit dodge though so you should give Revenue a call and see if they can clarify whether it would be still considered your PPR while you are away. The danger is that if they do not consider it your PPR, it will be classified as an investment property and you would have to pay a stamp duty clawback.

The_Conductor

First of all- as you are travelling abroad, and going abroad for the purpose of taking up fulltime employment abroad- your home is not considered your PPR for the period in which you are abroad.

This has implications on several grounds-

1. stamp duty could potentially be clawed back by the Revenue Commissioners.
2. Your tenants are entitled to claim rent-relief, irrespective of any deals you may make with them. They could potentially keep their side of the deal while you are away- only to claim what they are entitled to do at some point in the future landing you in soup.
3. It sounds like you are trying to use the rent-a-room scheme- as pointed out above, this is limited to 7,620 gross in any calendar year (inclusive of all bills.....)
4. Your mortgage interest relief as a FTB could potentially be compromised, as you're not living in the house you would only qualify for the lower level of relief.

You may think there are "ways around this"- legally there are not, its black and white. If you get caught, which is very possible as your tenants will be claiming their rent-relief, the penalties and forfeiture of your FTB status and rights would be horrendous.

dodgyme

smccarrick wrote: »

If you get caught, .

havent heard of one person who has. This is ireland you know!

The_Conductor

dodgyme wrote: »

havent heard of one person who has. This is ireland you know!

I am quite familiar with 2 people who did get caught. It does happen. There is now a specialised unit based in Dublin Castle examining issues such as this (its only there about 9 months, but its cases are published monthly in Iris Oifigiul).

S.

A Random Walk

You're posting on a public forum asking for advice on tax evasion?

ianblyth

Tax Evaision is against the law.. .tax avoidance is not...

A Random Walk

ianblyth wrote: »

Tax Evaision is against the law.. .tax avoidance is not...

Yes and the OP's original question is on tax evasion.

Look at it this way - you only worry about getting "caught" if you are evading tax.