Renting out house and Mortgage

cailinoBAC

I have my house 5 years and have recently moved abroad so am hoping to rent it out if I can. I know I will have to contact my bank because I won't be able to get the tax relief at source. I assume they're going to look for a higher interest rate too? Is this generally the case? The mortgage in the beginning was less than 60% the value, but now is probably about 70% of the value, not sure if that makes a difference. Do I get a brand new mortgage, or will they simply amend the terms?
I know I need to contact the bank to get exact details, I'm just wondering if I'll get much of a shock when I'm told how much more I'll have to pay.
I don't know how long I'll be abroad, probably about 3 years, and I'd be going back to live in the house afterwards, though obviously I don't know for sure, maybe I could be back sooner, maybe I'll stay away longer. If I came home in a few years and was living in my house again, would I get the terms of my original mortgage, or it would be negotiated again?

ricman

You should change your insurance policy on the house to include public liability, costs round 200euro more per year.IN case someone has an accident there.There should be no change in your mortgage costs.Theres no need to renegotiate your mortgage , just make sure it is paid every month.You.ll have to fill in a tax form as a landlord .say you income rental is 12k, your mortgage plus expenses eg insurance, maintenance is 14k, tax =zero, apart from prsi.see revenue ie , go ahead claim for tax relief, the worst they can do is refuse.
if your tax liability in eire is zero , then it may not be important.
YOU are only taxed on irish PROFITS ie income after expenses.
my pal lives abroad pays no tax, as her loan is 12k, rental income is 10k.
she has had a mortgage for ten years ,lived in the usa for 9 years.
BUT she still needed to register as a landlord with the PRTB and the revenue ,irish tax office as a landlord ,living abroad.

The_Conductor

1. You need to appoint an agent to represent you and your tax affairs in Ireland, while you are non resident. If you do not, any potential tenants are liable to deduct witholding tax from any rental income they owe you.

2. You need to inform your bank that the property you have mortgaged with them is no longer your Principle Private Residence. You would normally be switched to an investor mortage- and given the opportunity to fix for a range of possible periods. An investor will typically pay 1.5-2% more than an owner occuppier for a mortgage on any given property.

3. Not all of your expenses as a landlord are tax deductable- it is quite possible to have higher outgoings than income- and still have a tax bill to pay. For example- mortgage interest used to be fully tax deductable as an expense- now its only 75% and this is due to fall to 50% in the December budget.

4. Any tenancies must be registered with the PRTB, and any obligations under either the 2004 or 2009 acts complied with. As a landlord you are now obliged to maintain the exterior of a property- including any gardens or grounds. Your best bet is to appoint an agent to manage these obligations (however obviously this will eat into any potential income).

5. If your mortage was for 60% of the property worth 5 years ago- unless you have been making significant principle repayments- it is highly unlikely that the LTV of the mortgage is now ~70%

6. There is a new section in the Revenue Commissioners dealing solely with rented accommodation. Make sure your tax affairs are in order. Contrary to the message above- even if your outgoings exceed your income- it does not mean you owe no tax........ Be very careful!!!

cailinoBAC

Thanks for your help. I'm not really worried about the tax, as I am aware of what I need to do and I will be careful to make sure they are in order (having signed up for the AITI course I don't think I could really make any excuses!!). Also as soon as I actually find someone who wants to rent it, I will register with the PRTB straight away.
As for the LTV, I know it might not be exact, but I'm happy enough that it's about that, comparing to local asking prices and then taking a significant chunk off it. At the same time, yes, I could be completely wrong, but I'm not going to think too much about it, as I have no intention of selling. In any case, it's well off negative equity and whether I rent it or not, I won't have a problem paying the mortgage (touch wood...).

jimmycrackcorm

smccarrick wrote: »

2. You need to inform your bank that the property you have mortgaged with them is no longer your Principle Private Residence.

Why? What difference will it make if you don't approach the bank about it?

ricman

IF you do not inform them the bank will be sending letters to the house every time theres a change in mortgage rates ,insurance etc do you want your tenant to have acess to your private bank details etc. you can get an accountant to submit accounts for you as a landlord living abroad ,costs 300 euro approx .Even if the tax you pay is only 100 euro, the tax forms have to be filled in every year .You can probably claim the accountants fee ,and agents fee as a landlords ,expense like insurance .