First time letting out my apartment.

Captain McDuck

I live overseas and am a non-resident for the lat few years. I have an apartment in Dublin that I was renting out to friends under the table.

I could not go legit then because I took advantage of the first time buyers allowance when I bought the apartment five years ago (biggest mistake of my life!!). If you avail of the first time buyers allowance you cannot rent out the property for 5 years. I know what I did was illegal but I had absolutely no choice. I had to move abroad to find work and the only way I could keep up with mortgage payments ( which I did) was to rent the apartment. My rent does not cover the mortgage so I do not make amy money from this.

Anyway the five years are up now and my friends have just moved out and I have a new set of tenants moving in in January. For this tenancy I want to do everything by the book. I was hoping someone with some experience could give me some advice on the following issues.

1) Do I have to register with the PTRB before tenants move in or can I do it down the line during the tenancy?

2) When do I have to file a tax return stating that the apartment was rented out?

3) I heard that because I am a non resident that the onus in on the tenants to pay the revenue a contribution.... but if the rent falls below (E200) the mortgage is there any tax liability at all??

4) I called my bank anonymously and asked if I had to inform then if I was going to rent the place out, they said I would and my rate would go up to buy-to-let rate... I really can't afford this at all... what are the consequences if I do not tell them?? ( the guy on the phone seemed to imply that there were very few consequences)

5) I understand that the E100 property tax will fall due in January which is fine however I heard that I will also be liable to pay the "Non Principal Private Residences tax" of E200 because I am a non-resident not living in the apartment.. is this correct??

6) I have been strongly advised to buy public liability insurance incase one of my tenants has an accident and they sue me.. is this right?


I'm sure I may have missed a few important points but if anyone could shed any light on these issues ( particularly the tax issues) I would be very grateful.

odds_on

I presume that as you are living outside the country, you will be using an agent.

In this case, a good agent should be able to answer these question without hesitation.

It's one way to check out an agent especially as there are so many bad ones around.

Captain McDuck

My sister in law will be acting as the agent. She has done this type of work before and she lives beside the apartment. She is doing it as a favour but she is not up to speed on the situation with non resident landlords etc..

3DataModem

Captain McDuck wrote: »

I live overseas and am a non-resident for the lat few years. I have an apartment in Dublin that I was renting out to friends under the table.

I could not go legit then because I took advantage of the first time buyers allowance when I bought the apartment five years ago (biggest mistake of my life!!). If you avail of the first time buyers allowance you cannot rent out the property for 5 years. I know what I did was illegal but I had absolutely no choice. I had to move abroad to find work and the only way I could keep up with mortgage payments ( which I did) was to rent the apartment. My rent does not cover the mortgage so I do not make amy money from this.

Anyway the five years are up now and my friends have just moved out and I have a new set of tenants moving in in January. For this tenancy I want to do everything by the book. I was hoping someone with some experience could give me some advice on the following issues.

1) Do I have to register with the PTRB before tenants move in or can I do it down the line during the tenancy?

2) When do I have to file a tax return stating that the apartment was rented out?

3) I heard that because I am a non resident that the onus in on the tenants to pay the revenue a contribution.... but if the rent falls below (E200) the mortgage is there any tax liability at all??

4) I called my bank anonymously and asked if I had to inform then if I was going to rent the place out, they said I would and my rate would go up to buy-to-let rate... I really can't afford this at all... what are the consequences if I do not tell them?? ( the guy on the phone seemed to imply that there were very few consequences)

5) I understand that the E100 property tax will fall due in January which is fine however I heard that I will also be liable to pay the "Non Principal Private Residences tax" of E200 because I am a non-resident not living in the apartment.. is this correct??

6) I have been strongly advised to buy public liability insurance incase one of my tenants has an accident and they sue me.. is this right?


I'm sure I may have missed a few important points but if anyone could shed any light on these issues ( particularly the tax issues) I would be very grateful.

I'm not going to comment on the stuff that's happened up to now. You seem to be aware that what you've done is fraud.

You need to pay a NPPR charge of 200 per annum ... see NPPR.ie for loads of info.

You need to pay 100 per annum property tax.

You need to register the tenancy and that costs about 75 per tenancy.

You then need to pay income tax on the rent less expenses. Expenses can include 75% of the interest on the mortgage (not the whole mortgage, just the interest), any agency fees, any repairs and maintenance, and the above fees and charges.

As a non-resident you won't have a tax free allowance ... so you'll be paying about half the net income in tax.

And your agent will be obliged to deduct 20% of the rent as tax and pay it directly to the Revenue. If you aren't due any tax you get it back at the end of the year. If you don't use an agent, the tenant has to deduct it.

Re: the mortgage... I'd just simply not tell them. In my experience banks haven't changed the rate, but no sense taking the risk.

Just make sure you also have proper landlord insurance... about 120 per annum tops and well worth it.

Blueskye

Captain McDuck wrote: »

I live overseas and am a non-resident for the lat few years. I have an apartment in Dublin that I was renting out to friends under the table.

I could not go legit then because I took advantage of the first time buyers allowance when I bought the apartment five years ago (biggest mistake of my life!!). If you avail of the first time buyers allowance you cannot rent out the property for 5 years. I know what I did was illegal but I had absolutely no choice. I had to move abroad to find work and the only way I could keep up with mortgage payments ( which I did) was to rent the apartment. My rent does not cover the mortgage so I do not make amy money from this.

Anyway the five years are up now and my friends have just moved out and I have a new set of tenants moving in in January. For this tenancy I want to do everything by the book. I was hoping someone with some experience could give me some advice on the following issues.

1) Do I have to register with the PTRB before tenants move in or can I do it down the line during the tenancy?

2) When do I have to file a tax return stating that the apartment was rented out?

3) I heard that because I am a non resident that the onus in on the tenants to pay the revenue a contribution.... but if the rent falls below (E200) the mortgage is there any tax liability at all??

4) I called my bank anonymously and asked if I had to inform then if I was going to rent the place out, they said I would and my rate would go up to buy-to-let rate... I really can't afford this at all... what are the consequences if I do not tell them?? ( the guy on the phone seemed to imply that there were very few consequences)

5) I understand that the E100 property tax will fall due in January which is fine however I heard that I will also be liable to pay the "Non Principal Private Residences tax" of E200 because I am a non-resident not living in the apartment.. is this correct??

6) I have been strongly advised to buy public liability insurance incase one of my tenants has an accident and they sue me.. is this right?


I'm sure I may have missed a few important points but if anyone could shed any light on these issues ( particularly the tax issues) I would be very grateful.

You need to register with PRTB when your tenants sign the lease. I think it was €70 to register.

You file your tax return the following year outlining rent paid, any expenses you incurred while renting.

Don't know about 3.

I didn't inform bank, they later found out as I was talking to them about a loan but my rate wasn't changed. I did let home insurance company know as they changed the type of home insurance I had for letting.

Yes you'll have to pay the €200 NPPR charge plus the €100 property tax. NPPR charge you a lot for each month you're late paying.

odds_on

Then, I humbly and respectfully suggest that she gets up to speed. Also with the Residential Tenancies Act 2004; as well as the Housing (Standards for Rented Houses) Regulations 2008 and the amendment in 2009.

Captain McDuck

3DataModem wrote: »

I'm not going to comment on the stuff that's happened up to now. You seem to be aware that what you've done is fraud.

You need to pay a NPPR charge of 200 per annum ... see NPPR.ie for loads of info.

You need to pay 100 per annum property tax.

You need to register the tenancy and that costs about 75 per tenancy.

You then need to pay income tax on the rent less expenses. Expenses can include 75% of the interest on the mortgage (not the whole mortgage, just the interest), any agency fees, any repairs and maintenance, and the above fees and charges.

As a non-resident you won't have a tax free allowance ... so you'll be paying about half the net income in tax.

And your agent will be obliged to deduct 20% of the rent as tax and pay it directly to the Revenue. If you aren't due any tax you get it back at the end of the year. If you don't use an agent, the tenant has to deduct it.

Re: the mortgage... I'd just simply not tell them. In my experience banks haven't changed the rate, but no sense taking the risk.

Just make sure you also have proper landlord insurance... about 120 per annum tops and well worth it.

So the tenants or the agent will pay the revenue 20% of the rent no matter what? Even though the rent is 950 and the mortgage repayment is 1250??

I though that if the mortgage repayment is more than the rental income then there is no liability.

3DataModem

Captain McDuck wrote: »

3DataModem wrote: »

I'm not going to comment on the stuff that's happened up to now. You seem to be aware that what you've done is fraud.

You need to pay a NPPR charge of 200 per annum ... see NPPR.ie for loads of info.

You need to pay 100 per annum property tax.

You need to register the tenancy and that costs about 75 per tenancy.

You then need to pay income tax on the rent less expenses. Expenses can include 75% of the interest on the mortgage (not the whole mortgage, just the interest), any agency fees, any repairs and maintenance, and the above fees and charges.

As a non-resident you won't have a tax free allowance ... so you'll be paying about half the net income in tax.

And your agent will be obliged to deduct 20% of the rent as tax and pay it directly to the Revenue. If you aren't due any tax you get it back at the end of the year. If you don't use an agent, the tenant has to deduct it.

Re: the mortgage... I'd just simply not tell them. In my experience banks haven't changed the rate, but no sense taking the risk.

Just make sure you also have proper landlord insurance... about 120 per annum tops and well worth it.

So the tenants or the agent will pay the revenue 20% of the rent no matter what? Even though the rent is 950 and the mortgage repayment is 1250??

I though that if the mortgage repayment is more than the rental income then there is no liability.

2 things;

(1) The 20pc deduction doesn't apply to your tenant as your sister is your agent. She must deduct it and submit at end of year... but in practice this doesn't need to happen as long as you pay your proper taxes each year.

(2) The total mortgage repayment doesnt matter. The interest component is what matter. Say 800 of your mortgage is interest. Then 600 is allowable as expenses. So with a rent of 11,400 per annum and allowable interest of 7200 per annum plus 375 in NPPR, property tax and tenant fees, plus about another grand in insurance, management fees etc...
Income = 11,400
Expenses = 8,575 approx
Profit = 1,825
Tax = 900 approx per annum

If your management fee or other expenses is higher, then you are probably going to pay very little or no tax.

athtrasna

Captain McDuck wrote: »

So the tenants or the agent will pay the revenue 20% of the rent no matter what? Even though the rent is 950 and the mortgage repayment is 1250??

I though that if the mortgage repayment is more than the rental income then there is no liability.

You pay tax on all rental income less allowable deductions as has been explained already. It doesn't matter if your mortgage is ten times more than the income received, you still pay tax on the income.

These are difficult times but tax evasion and fraud are still criminal offences, Revenue are getting better at tracking down under the table landlords, and rightly so.

mrs vimes

The sister-in-law doesn't just deduct 20% for Revenue, she has to register with Revenue as an agent and get a new PPS number for the agency. She is then responsible for filing correct tax returns every year and submitting the correct amount of tax.

Check Revenue's website for full details.

Also, NPPR charge is not tax deductible, I don't know whether the new 100 household charge will be or not.

Marcusm

mrs vimes wrote: »

The sister-in-law doesn't just deduct 20% for Revenue, she has to register with Revenue as an agent and get a new PPS number for the agency. She is then responsible for filing correct tax returns every year and submitting the correct amount of tax.

Check Revenue's website for full details.

Also, NPPR charge is not tax deductible, I don't know whether the new 100 household charge will be or not.

This is the correct advice on the income tax position. Don't forget you have to get a BER cert before you have any viewings!!!

3DataModem

mrs vimes wrote: »

The sister-in-law doesn't just deduct 20% for Revenue, she has to register with Revenue as an agent and get a new PPS number for the agency. She is then responsible for filing correct tax returns every year and submitting the correct amount of tax.

Check Revenue's website for full details.

Also, NPPR charge is not tax deductible, I don't know whether the new 100 household charge will be or not.

Thanks for posting. News to me. Looks like I owe a little back-tax for deduction of NPPRs.

Captain McDuck

3DataModem wrote: »

(2) The total mortgage repayment doesnt matter. The interest component is what matter. Say 800 of your mortgage is interest. Then 600 is allowable as expenses. So with a rent of 11,400 per annum and allowable interest of 7200 per annum plus 375 in NPPR, property tax and tenant fees, plus about another grand in insurance, management fees etc...
Income = 11,400
Expenses = 8,575 approx
Profit = 1,825
Tax = 900 approx per annum

If your management fee or other expenses is higher, then you are probably going to pay very little or no tax.

How do I find out what the interest component is on my mortgage repayment?

3DataModem

Captain McDuck wrote: »

3DataModem wrote: »

(2) The total mortgage repayment doesnt matter. The interest component is what matter. Say 800 of your mortgage is interest. Then 600 is allowable as expenses. So with a rent of 11,400 per annum and allowable interest of 7200 per annum plus 375 in NPPR, property tax and tenant fees, plus about another grand in insurance, management fees etc...
Income = 11,400
Expenses = 8,575 approx
Profit = 1,825
Tax = 900 approx per annum

If your management fee or other expenses is higher, then you are probably going to pay very little or no tax.

How do I find out what the interest component is on my mortgage repayment?

The bank will send you an interest cert every year.

However for a quick approx calculation just multiply your balance outstanding x current interest rate and divide by 12.

E.g if your mortgage has 300000 left and your interest rate is 3% then your interest per month is 300000 x 0.03 / 12 = 750.00