Home owner but its now let out

Soz*

Hi Folks

Thanks for any assistance anyone can provide, I'm a bit in the dark with all my tax obligations in relation to my home at the moment so I'd appreciate any help that is given. Situation is myself and my ex are homeowners the last 5 or so years, we broke up earlier this year and neither of us could afford (nor wanted to) hold onto the house by ourselves, so we both went our seperate ways and have the house rented out now. I'm currently trying to get all my finances in order as I'm getting made redundant in a few months and have just been reviewing our accounts, we still qualify for the TRS and its paid into our bank account every month. There is a shortfall on the mortgage with the rent we are getting, and we're on a fixed mortgage, myself and himself are making up the difference. Two questions really - are we still entitled to the TRS now that we're not living in the house and secondly have we to declare to the Revenue we have the house rented even though we aren't making a profit on it and are we obliged to pay more in tax? How will this affect me if at all when I'm made redundant?

Thanks in advance

nompere

You're not entitled to TRS once the house is let.

Instead you're entitled to deduct 75% of the gross amount of the interest from the rents in working out how much tax has to be paid on the rents. Your bank will tell you how much interest has been paid. Unless your loan is interest only part of the repayment will be capital and isn't allowable as a deduction from the rent. Do be aware that you are only allowed to deduct interest from the rents if the tenancy is registered with PRTB. You will have to do this before the end of the year.

In tax terms you might well be making a profit on the rent - and Revenue will want their share. The tenant will probably be making claim for relief so Revenue will be aware (eventually) that you have the house let.

The net taxable rents are divisible between the two of you if you are now being treated separately.

I can't see how your being made redundant is going to change the principle of how rents get taxed.

Do get PRTB registered - it will save you money, and do tell the bank to stop TRS. Talk to Revenue - they will help you to sort out how to treat the TRS you have received.

Soz*

Super thank you for your help

mathepac

Note that you cannot backdate your PRTB registration and the 75% allowance of mortgage interest is only allowed from the date of registration.

Soz*

mathepac wrote: »

Note that you cannot backdate your PRTB registration and the 75% allowance of mortgage interest is only allowed from the date of registration.

Cheers. Believe it may already be registered as we've let out the house through a letting agent, but I'll be checking in the AM

nompere

mathepac wrote: »

Note that you cannot backdate your PRTB registration and the 75% allowance of mortgage interest is only allowed from the date of registration.

I'm not sure that I agree with you.

This is what the legislation provides:

"... unless the person chargeable can show that the registration requirements
of Part 7 of the Residential Tenancies Act 2004 have been complied with in
respect of all tenancies which existed in relation to that premises in that chargeable period."

In relation to a claim for interest relief for 2010 it only seems to be necessary that a tenancy is registered in that chargeable period - the legislation is silent on when the registration has to take place. The explanatory memorandum on Finance Act 2006 is similarly silent. Revenue's notes for guidance do no more than copy the words of the legislation.

If it was necessary that the registration has to be in place before allowing an interest claim it would say so.