Renting my house out to move to a different area

3qsmavrod5twfe

I am in a situation where I want to move for work and for personal reasons. There are a few options when it comes to moving - sell at a massive loss (hardly desireable) or let my own home out and rent elsewhere which seems more workable. Luckily as I spend so much commuting anyway moving to a different closer area isn't going to cost me a huge pile extra so it is a feasible move. Speaking to EA's the rental market in the area is quite strong so it shouldn't be a problem letting it out.

My question really is what is the tax liability for me if I do rent out my house and effectively become a landlord. If I have to pay tax on it at marginal rates of income tax it doesn't stay as a feasible option any more. Anyone gone through this and can let me know what happens.

The_Conductor

Kingston Nervous Seascape wrote: »

I am in a situation where I want to move for work and for personal reasons. There are a few options when it comes to moving - sell at a massive loss (hardly desireable) or let my own home out and rent elsewhere which seems more workable. Luckily as I spend so much commuting anyway moving to a different closer area isn't going to cost me a huge pile extra so it is a feasible move. Speaking to EA's the rental market in the area is quite strong so it shouldn't be a problem letting it out.

My question really is what is the tax liability for me if I do rent out my house and effectively become a landlord. If I have to pay tax on it at marginal rates of income tax it doesn't stay as a feasible option any more. Anyone gone through this and can let me know what happens.

At present you cannot offset renting your own home against renting another residence elsewhere. It used be allowed, but was done away with. If you have a look in this forum- its a question that comes up again and again.......

goodies

hello there...will be watching repsonses to this with great interest. We are in very similar situation...absolutely heart breaking to be going back to the tenant situation again...we need more space though now for the children..

seems extremely unfair to have to pay tax on the original house you cannot sell..

eclectichoney

goodies wrote: »

hello there...will be watching repsonses to this with great interest. We are in very similar situation...absolutely heart breaking to be going back to the tenant situation again...we need more space though now for the children..

seems extremely unfair to have to pay tax on the original house you cannot sell..

You probably could sell it, just not at the price you would like.

Also you are not paying tax on the 'house' but on the income you are receiving from renting it out. If you didn't rent it out, you would not have to pay any tax.

3qsmavrod5twfe

Thanks for the replies. Had a bit of a look around and came up with the following:

A guide to renting for landlords:
http://www.irishlandlord.com/documents/Tax%20Guides%20&%20Forms/Revenue%20Guide%20to%20Rental%20Income.pdf

A couple of threads here that might be of use:
http://www.boards.ie/vbulletin/showthread.php?t=2056286765

http://www.boards.ie/vbulletin/showthread.php?p=54024922

Not all doom and gloom as the deductions (in my case anyway) will most likely cover the rental income so it is looking like the gov won't be taking a big chunk of any rental income generated.

Hopefully this helps anyone else who is looking for the same topic

The_Conductor

The biggest deduction allowable against rental income before determination of taxable income- is course mortgage interest, which is currently allowable as an expense at 75% (though this is due to be phased out altogether over the next few years).

If you have a sizeable mortgage- its entirely possible that it may be possible to cover the rental income from the property.

Treehouse72

Kingston Nervous Seascape wrote: »

Not all doom and gloom as the deductions (in my case anyway) will most likely cover the rental income so it is looking like the gov won't be taking a big chunk of any rental income generated.

Could you explain this Kingston Nervous Seascape? How much have you calculated you can deduct?

In general terms I always say on these threads that experience shows amateur landlords overestimate income and underestimate costs and stress when they let out their homes. Massively so sometimes. If your calculations are showing you coming out ahead on the deal, I would advise caution and to check your numbers again. There are lots of hidden costs like second home tax, new tenants' insurance, maintenance/redecoration, void periods, the small risk of delinquent tenants once in a blue moon, PTRB registration, loss of TRS, letting agent fees (if you are living some distance away, this will probably be necessary). It can be a real drip-drip of cash.

3qsmavrod5twfe

Treehouse72 wrote: »

Could you explain this maccasarlaigh? How much have you calculated you can deduct?

In general terms I always say on these threads that experience shows amateur landlords overestimate income and underestimate costs and stress when they let out their homes. Massively so sometimes. If your calculations are showing you coming out ahead on the deal, I would advise caution and to check your numbers again. There are lots of hidden costs like second home tax, new tenants' insurance, maintenance/redecoration, void periods, the small risk of delinquent tenants once in a blue moon, PTRB registration, loss of TRS, letting agent fees (if you are living some distance away, this will probably be necessary). It can be a real drip-drip of cash.

Hi Treehouse

I understand what you are saying and you are completely correct. I am in no terms making or ever going to make money out of this particular arrangement as the expenses of running the place will always far outweigh any income generated from it. My only concern was the taxation of the rental income in that I will be paying a mortgage and expenses and a tax on the income to let a property as I didn't know what the deductables from the income were.

In my case potential rental income will be approx 5-600 pm but my deductable costs will run at approx 875 per month (including TRS not being allowed for and not including capital payments on the property etc)

The clawback for me will be the potential savings that my wife and I will make in commute costs (approx €250 a month on petrol alone and that's only rising), we will be entitled to tax relief on rent (€800 pa for a married couple I believe) as we will be moving to rented accomodation and you cannot put a monetary value on having an additional 12 -13 hours a week that you are not commuting - to my mind anyway.

To be honest we are in a position where we want to move house but to sell our home at the moment wouldn't even see a recoup of 50% of the initial outlay - and that is if we even sell it! This is more a workaround for that situation where we are paying a mortgage and have substantial negative equity, but at least an asset at the end of it all that may recoup some of it's value over time. The alternative is decidedly less palatable as it would mean selling at a knockdown price, having the equivilent of a mortgage left to repay and having no asset at all.

Believe me it is not a decision we are rushing into as I never wanted to be a landlord!

Thanks for the warnings though

Treehouse72

Deductible costs of €875pm on a rental of €500-€600pm seems strange to me (although I don't know a lot about it to be honest). What are those deductible costs?

3qsmavrod5twfe

Bought at the height of things so interest, management fees, insurance etc etc. Rental market is strong with demand but there is a ceiling on rent prices for the area.