Can they claim Mortgage interest relief..help?

darkskol

Ok quick question here I had a look on citizens information but wasn't that clear.
My cousin currently lives in the states and they own a house over there with no mortgage. They are planning to buy a house here now and move back here in a couple of years. Can they claim mortgage interest relief from when they buy the house or what would the situation be? All help appreciated.

Victor

They can, but they won't have first time buyers status.

In parts of the USA you only get relief with first time buyers status.

RoryW

are they going to rent the house out in the meantime ?

darkskol

Victor wrote: »

They can, but they won't have first time buyers status.

In parts of the USA you only get relief with first time buyers status.

Thanks for the reply; so they can claim relief as non first time buyers when they buy their house in Ireland...forgot to mention they will be getting their mortgage through an american bank would that make a difference?

darkskol

RoryW wrote: »

are they going to rent the house out in the meantime ?

Yeah they are thinking about it

DublinDilbert

Ummm they want to claim tax relief on money they don't earn here?? :rolleyes:

Tax relief means you pay less income tax on your wages, but they won't be earning any money here, hence they won't be paying any income tax in Ireland... so how can the irish government give them tax relief?

Were they hoping to pay less income tax in the states?

darkskol

DublinDilbert wrote: »

Ummm they want to claim tax relief on money they don't earn here?? :rolleyes:

OK well when I say rent I meant they are giving it to her sister to live in for a year with no charge (apart from bills). So she would not be entitled to it as she is not living here and paying into the irish economy at moment but what about next year when they move here and work here can they claim it from then?

Weyhey

darkskol wrote: »

Ok quick question here I had a look on citizens information but wasn't that clear.
My cousin currently lives in the states and they own a house over there with no mortgage. They are planning to buy a house here now and move back here in a couple of years. Can they claim mortgage interest relief from when they buy the house or what would the situation be? All help appreciated.

You can only claim tax relief if the property is your sole residence and within the State. See www.revenue.ie for information on tax relief at source (TRS) in particular :http://www.revenue.ie/index.htm?/faqs/trs_relief.htm

Also take a look here:
http://www.diarmaidcondon.com/Articles/2008/Tax%20Implications%20of%20Purchasing%20a%20Property%20Abroad.html

The_Conductor

As per above- as the property is not their principle private residence, and they are not habitually resident here:

1. They will be treated as an investor for stamp duty purposes when purchasing the property.
2. They have no entitlement to Mortgage Interest Relief.
3. They can rent out the property and claim all eligible costs before determination of taxable income- if they so wish, but why?

4. What is the merit in getting their Irish mortgage from a US bank? Its still in Euro- at Euro bourse rates, and they expose themselves to currency swings on top of everything else? Why not wait until they are tax resident here, and then purchase and not have all the ancilliary problems associated with tax compliance issues?

antoinolachtnai

Why would they not be entitled to mortgage interest relief?

The_Conductor

antoinolachtnai wrote: »

Why would they not be entitled to mortgage interest relief?

Because they are proposing to let their property free of charge to a family member.

You are only entitled to claim mortgage interest relief on a residential property if
1. it is your Principle Private Residence or
2. It is a residential property explicity compliant with the registration provisions of the 2004 Residential Tenancies Act (or a Part 4 Tenancy).

Rules governing the eligibility for mortgage interest relief were massively overhauled in the 2004 and 2005 Finance Acts.

Victor

darkskol wrote: »

They are planning to buy a house here now and move back here in a couple of years.

Ah, it was late and I missed the significance of this part.

DublinDilbert is correct, they need to be paying tax before they can claim tax relief.

To be honest they would need to run any such scheme before a solicitor or accountant that is up to speed on both Irish and American tax law.

antoinolachtnai

Ah yes, but they could buy it and rent it as suggested in point 3 and claim tax relief no problem.

Of course, if they get the mortgage in america, i think it could be quite interesting to claim the tax relief. Not impossible, but interesting. Also, if they are buying it mainly as a house to live in, I wonder if they can claim tax relief at all.