Renting out my house

rougegal

I will be moving out of my house soon to relocate for work and I have decided to rent it out. I'll be working and living about 2 hours away and think that a letting agent / property manager may be the way to go - especially as I have little to no experience in these matters.
Any advice for me on things I should be aware of?

Riverireland

You will be liable for tax at the highest rate on the income from your house. You will still have to pay full rent on your new accommodation. Very unfair imo but there you go!

filbert the fox

rougegal wrote: »

I will be moving out of my house soon to relocate for work and I have decided to rent it out. I'll be working and living about 2 hours away and think that a letting agent / property manager may be the way to go - especially as I have little to no experience in these matters.
Any advice for me on things I should be aware of?

I'd buy an economical car and commute.

The overburdening in taxation/registration with Prtb/ property tax/ Prsi/ Usc of Landlords who make "profits" from lettings is criminal and makes it undesirable to be in that position. Couple that with the risk of dodgy tenants and the nightmare is complete.

rougegal

Thanks @Riverireland i agree that it's unfair that it's going to cost me more to rent it out than if I stay there myself. I'd rather not leave it empty.

If it's two hours or less id be inclined to be giving commuting a go also, it would be less hassle and if the car is economical it shouldn't be too much different in costs.

If you stayed in a B&B one night and could work from home one day that would ease the commute a lot too, say stay down the Monday night and work from home the Friday would mean 3 return trips over the week.

Edit: If you were to rent it out I would personally look after it myself though especially with living so close relatively speaking. I'd much prefer to be picking the tenants and carrying out regular inspections myself.

Penguino

If you hire an EA to let/manage your property you can write the full cost of this off against tax on rental income as it is seen as an expenditure.

What part of the country is the property in?

ahnowbrowncow

So you're recommending driving 20 hours a week to work instead of being a landlord? Being a landlord must be horrible because there's no way I'd even consider spending that amount of time commuting.

The_Conductor

ahnowbrowncow wrote: »

So you're recommending driving 20 hours a week to work instead of being a landlord? Being a landlord must be horrible because there's no way I'd even consider spending that amount of time commuting.

Most people who work in Dublin- and live on the outskirts- habitually spend 20 hours a week commuting (sometimes more). The tax treatment of landlords and the regulatory requirements are such that you really do not want to go into the property letting business- unless you really need to.

ahnowbrowncow

ahnowbrowncow wrote: »

So you're recommending driving 20 hours a week to work instead of being a landlord? Being a landlord must be horrible because there's no way I'd even consider spending that amount of time commuting.

I wasn't really suggesting it because I think being a LL itself is necessarily an awful lot of hassle but moving and more so moving out of the place you bought and also having to be paying rent when you already own a house is hassle and of course paying tax on the rental income is another big issue. Also you may know people in the area and like the area, hence why the house was bought in the first place.

20 hours a week is a lot, bit not totally outlandish either and as I outlined you could get that down to 12 hours a week quite easily (depending on the flexibility of your job).

The deciding factor for me would be how attached I was to the area where I owned the house. If it was just a place I bought and had no real attachment then I'd be willing to put up with less of a commute, however if I was living near family and friends and in an area I really wanted to live I'd be to put up with the guts of 20 hours commuting a week.

Tiddlypeeps

The_Conductor wrote: »

Most people who work in Dublin- and live on the outskirts- habitually spend 20 hours a week commuting (sometimes more). The tax treatment of landlords and the regulatory requirements are such that you really do not want to go into the property letting business- unless you really need to.

There is no way this is true. I live on the outskirts of Dublin, and over the last few years have worked in various parts of Dublin city and my commute has never taken more than an hour each way. The side I come in from was once known as the worst side of Dublin to come in from at rush hour, it's much better since the Newlands cross flyover went up, but even before that an hour was the max commute.

Unless you are really pushing the definition of the word outskirt where could possibly take 2 hours to reach the city centre? Even if it exists it is certainly not the norm.

hytrogen

Why not let out a room or two first to a lodger(s)? Mates rate and mates of mates only & see how that goes first to cover the costs of commuting (and your side of the bills) if you're worried about damage or extra costs to letting the house out? Then if it gets too much (time wasted commuting and stress) then relocate?
I'm in a similar position having to move to another city to go back to college for a year and doing that to offset my expenses I'm not earning.
Otherwise clear your stuff & prepare for the nightmare to ensue..

hytrogen

hytrogen wrote: »

Why not let out a room or two first to a lodger(s)?.

Actually this raises a question I was wondering in the past, if the op was to rent a room in a houseshare say in his new city and stay there a couple of evenings a week but return at the weekend and also some nights during the week to his own home would it legally fall under the rent a room scheme as the property would still be his principal residence and the place he was renting would be no more than a B&B really.

adrianw

Cruz Drab Gypsy wrote: »

Actually this raises a question I was wondering in the past, if the op was to rent a room in a houseshare say in his new city and stay there a couple of evenings a week but return at the weekend and also some nights during the week to his own home would it legally fall under the rent a room scheme as the property would still be his principal residence and the place he was renting would be no more than a B&B really.

Depends on what you mean by a couple of nights. If it was just Friday, Saturday and Sunday, then it is highly unlikely Revenue would entertain that argument.
The place he is renting even if it was just a room in a B&B can still be classified as a Principal Residence.

The_Conductor

What Adrian is saying is the case- you're not going to get away with playing mind games with Revenue- they are well aware of these kinds of tricks.

The_Conductor

The_Conductor wrote: »

What Adrian is saying is the case- you're not going to get away with playing mind games with Revenue- they are well aware of these kinds of tricks.

Oh I'm not suggesting games or anything like that I was just genuinely wondering how it would work.

adrianw wrote: »

Depends on what you mean by a couple of nights. If it was just Friday, Saturday and Sunday, then it is highly unlikely Revenue would entertain that argument.
The place he is renting even if it was just a room in a B&B can still be classified as a Principal Residence.

If he spent more days in his own house than the rented place say 4 nights at home 3 in the rented place and literally just used it as a place to sleep, that's the type of scenario I was thinking off. Basically his life was still based around his own house. Just wondering as people working away from home is happening quite a bit now, and these types of scenarios where someone waits away some days of the week but still base their life at their own house are happening quite often.

I was actually thinking of it from the point of view of someone who as been doing rent a room all along and is faced with spending some time away every week due to change in job rather than someone doing it when they move away in order to rent out the place tax free.

beatlesfan3333

I used to live an hour away from work, so commuted two hours a day. I have since rented out my house and now rent closer to work. It takes me 15 mins to get to work now. My quality of life has increased enormously. I can't stress enough how happy I am to have moved and not commute anymore. Being a new landlord is stressful and you need to know your stuff. But as someone who took the plunge recently, I would recommend it. I have yet to see how much tax I will need to pay though! Good luck

sunnysoutheast

The_Conductor wrote: »

What Adrian is saying is the case- you're not going to get away with playing mind games with Revenue- they are well aware of these kinds of tricks.

It really isn't, sorry. Redefining a PPR to a B&B based on staying away for work during the week? Nonsense.

Obviously artificial arrangements? - yes they are suspect and rightly so.

adrianw

sunnysoutheast wrote: »

It really isn't, sorry. Redefining a PPR to a B&B based on staying away for work during the week? Nonsense.

Obviously artificial arrangements? - yes they are suspect and rightly so.

And why is what I said nonsense?
Are you basing this assertion on any particular piece of legislation or personal opinion?

sunnysoutheast

adrianw wrote: »

And why is what I said nonsense?
Are you basing this assertion on any particular piece of legislation or personal opinion?

You are the one making the assertion that Revenue will define staying in a B & B during the week for work purposes as a PPR rather than the property that mortgage, property tax, utilities etc. etc. are paid on. It is down to you, therefore, to provide evidence that this would be the case. Over to you.

adrianw

sunnysoutheast wrote: »

You are the one making the assertion that Revenue will define staying in a B & B during the week for work purposes as a PPR rather than the property that mortgage, property tax, utilities etc. etc. are paid on. It is down to you, therefore, to provide evidence that this would be the case. Over to you.

Section 604 of the Taxes Consolidation Act 1997.

I await your legislative reference or an apology.

sunnysoutheast

adrianw wrote: »

Section 604 of the Taxes Consolidation Act 1997.

I await your legislative reference or an apology.

Have a look at (5) (b) (ii)

Good night.

adrianw

sunnysoutheast wrote: »

Have a look at (5) (b) (ii)

Good night.

And where in that section does it say if an individual rents and room in a house / b&b while owning another property elsewhere, that the b&b cannot be deemed his or her PPR?

All that says is a property may be deemed to be your residence during a time of absence.

It says nothing about a second property NOT being eligible to be a PPR.

sunnysoutheast

adrianw wrote: »

And where in that section does it say if an individual rents and room in a house / b&b while owning another property elsewhere, that the b&b cannot be deemed his or her PPR?

All that says is a property may be deemed to be your residence during a time of absence.

It says nothing about a second property NOT being eligible to be a PPR.

Well where does it say that a temporary B&B can be deemed to be a PPR? Bear in mind the section of the ISB you sent through was referring to disposal of assets and consequent liability to capital gains tax.

It was you who made the statement originally so you cannot expect me to prove a negative. If you can provide judgements, case law, any verifiable source that supports your contention I will happily accept that I am wrong and make a charity donation this weekend as a penance.

As I said originally, where the situation is artificial - e.g. Person A doesn't really live in the house, owns/rents the other property, etc. then there could well be an issue. Where Person A simply stays elsewhere during the week for work purposes but returns at the weekend I cannot see how this can be an issue regarding their property being considered their PPR. For one thing, how would Revenue even know?

The_Conductor

Moderator note

Guys- less aggression and a little more civility towards one another please.

adrianw

Point noted The_Conductor, however I feel I have been civil. I did not make any disparaging remarks against Sunnysoutheast. I am merely defending my original post which he said was nonsense.

I have asked him to provide legislative backup to this comment or to provide an apology, neither of which have been supplied.

Sunnysoutheast, the legislative reference states an individual can only have one Principal Residence - it does not say the accommodation has to be a property owned by the individual - as per a Revenue note.

www.revenue.ie/en/about/foi/s16/income-tax...tax.../19-07-03.pdf

faceman

Without knowing your financial status or that of your mortgage, my first opinion would be consideration to the rent a room scheme.

If you rent our your house you will lose your mortgage interest relief and be liable for the full rate of tax on the rental income regardless of whether it covers your mortgage or not. You will also have to pay the PTRB and your home insurance may increase too.

filbert the fox

faceman wrote: »

Without knowing your financial status or that of your mortgage, my first opinion would be consideration to the rent a room scheme.

If you rent our your house you will lose your mortgage interest relief and be liable for the full rate of tax on the rental income regardless of whether it covers your mortgage or not. You will also have to pay the PTRB and your home insurance may increase too.

Also for consideration the OP says relocating for work. Is this permanent? if so, why hold onto property - sell it and buy in new location. After all aren't we told that prices are BOOmier!

NIMAN

If becoming a reluctant landlord, I found this website a great help

www.irishlandlord.com

punisher5112

Op you are new to being a LL so I suggest you get to terms with this idea that it will be a business you are running and try and part yourself from the property as to not be emotionaly attached.

You would be best with an estate agent and also make well sure of who will be renting are genuine and have good genuine references.

You would be best also removing all personal items and if you have really good furniture take it with you or put in storage.
Buy second hand furniture for parts and if you need to buy say cheaper beds keep all receipts as can be offset as costs on tax.

Make sure to register tenancy and take all bills out of your name and put into new tenants names.

Good luck with the job and move op.

3DataModem

Rent a Room is not about where you spend the most nights. If you are not maintaining a second residence then the requirement to keep your house as your PPR is pretty tenuous; people maintain PPRs in ireland with only a few days a month at home.

adrianw

adrianw wrote: »

And why is what I said nonsense?
Are you basing this assertion on any particular piece of legislation or personal opinion?

Reading the below you would really struggle to make a case for a B&B or room in a houseshare for crashing in a few night a week being your PPR, in fact I don't see how you could reach that conclusion.

4.1 Sole or main residence
The room or rooms must be in a residential premises that is situated in the State and that is occupied by an individual as his/her sole or main residence during the particular tax year.

An individual may live in more than one residence but can only avail of rent-a-room relief in respect of his/her sole or main residence.

In general, an individual’s sole or main residence is that individual’s home for the greater part of the time and where friends and correspondents would expect to find him/her.

There is very blatant abuse of the rent a room scheme going on but I really think where a person is staying away from home during the week/some of the week that its a very fair use of the scheme.

Its no different to someone who travels a lot for work, if you were abroad a few days every week going to different places nobody would say that the persons home isn't their PPR, why should it be different if the person just travels within the country and to the same location rather than different ones. Their whole life still revolves around their home, they are simply sleeping somewhere else during the working week.

3DataModem

Ok now we've moved from what's "legal" to what's "fair".

I don't believe it is "fair" that a person outlaying rent gets no relief at all for the rent income on their previous home (in the curcumstances described above).

OP what you are proposing is very likely to be completely legal - you can decide yourself if it's "moral". iMo it is.

adrianw

My original post:
'Depends on what you mean by a couple of nights. If it was just Friday, Saturday and Sunday, then it is highly unlikely Revenue would entertain that argument.
The place he is renting even if it was just a room in a B&B can still be classified as a Principal Residence.'

If an individual owns a property and moves within Ireland and as you said NOX001 is in a property 'for the greater part of the time and where friends and correspondents would expect to find him/her' - being Monday to Friday, this can be deemed by Revenue to be their principal residence, which is what I said.

If you are from Connemara and buy a house there, but live in Dublin Monday to Friday, your house in Commemara may be your HOME but it is not you PPR.

As per 3DataModern what is fair and what is legal are very different.

3DataModem

Actually if you were there Fri, Sat and Sun revenue would definitely be happy to call it your PPR.

If you lived and worked abroad and spent only two nights a week in the house, they would be quick to define it as your PPR and make you tax resident there.

sunnysoutheast

adrianw wrote: »

Point noted The_Conductor, however I feel I have been civil. I did not make any disparaging remarks against Sunnysoutheast. I am merely defending my original post which he said was nonsense.

I have asked him to provide legislative backup to this comment or to provide an apology, neither of which have been supplied.

Sunnysoutheast, the legislative reference states an individual can only have one Principal Residence - it does not say the accommodation has to be a property owned by the individual - as per a Revenue note.

www.revenue.ie/en/about/foi/s16/income-tax...tax.../19-07-03.pdf

Link doesn't work.

I am aware that an individual can only have one PPR.

The issue I had with your post is that, as far as I can ascertain (and I have seen no evidence provided by anybody which contradicts this) the fact that an individual stays away from their "main residence" during the working week has no impact on the designation of that home as their PPR, always assuming that they are genuinely living there. They are of course free to nominate any other property as their PPR should they wish, but it is difficult to see any advantage to doing so here.

Given this position, as the status of the PPR is therefore not in doubt, I believe the use of rent-a-room relief is similarly available to that individual. In fact, I would hazard a guess that the income from rent-a-room relief on their PPR is cross-subsidising the costs for people staying away for work in a large number of cases at present.

I am not going to be able to prove a negative as I see no legal or tax issues with the above arrangement that would be need to be specifically legislated against. If you believe differently, then please provide a verifiable source which contradicts or corrects my understanding for all our benefit. Thanks.

adrianw

adrianw wrote: »

If you are from Connemara and buy a house there, but live in Dublin Monday to Friday, your house in Commemara may be your HOME but it is not you PPR.

If you are renting a full apartment in Dublin, having bills and correspondence going there etc etc then then I could see how it could be argued.

If you are simply crashing in a houseshare monday to friday or staying in a B&B I don't think they could possibly define it as your PPR? you have absolutely no ties whatsoever to the place.

If on average throughout the year you spend more nights at home than in the other place then you definitely cant argue its not your PPR and given you are home for long periods during holidays etc that will all add up also.

sunnysoutheast

Angelina Mango Tutor wrote: »

If you are renting a full apartment in Dublin, having bills and correspondence going there etc etc then then I could see how it could be argued.

If you are simply crashing in a houseshare monday to friday or staying in a B&B I don't think they could possibly define it as your PPR? you have absolutely no ties whatsoever to the place.

If on average throughout the year you spend more nights at home than in the other place then you definitely cant argue its not your PPR and given you are home for long periods during holidays etc that will all add up also.

I would expect that Revenue would be far more interested in people nominating an owned Dublin property as their PPR in order to sell it CGT-free. It might be difficult to sustain such a nomination if, for example, your family still lives in the country and you return there every weekend. I think a married couple will only have one PPR between them anyway, I'm not sure on that.

adrianw

Once again, I will refer to my original post which stated that even if an individual owns a property but lives elsewhere, the second property even if this is B&B can be deemed to be their PPR.

Legislative reference previously provided Sec 604 states:

For the purposes of this section, an individual shall not be treated as having more than one main residence at any one time and in so far as it is necessary to determine which of 2 or more residences is an individual's main residence for any period—


(a) that question may be determined by agreement between the inspector and the individual on the latter giving notice in writing to the inspector by the end of the year 1975-76 or within 2 years from the beginning of that period if that is later, and


(b) failing such agreement, the question shall be determined by the inspector, whose determination may be as respects either the whole or specified parts of the period of ownership in question.

Does the legislation say that a Residence = house you own? no.
Is it possible to live / reside in a B&B? Yes.
Would this be enjoyable? Probably not.
Does this matter from a legal standpoint? no.

Some people are completing missing the point and are arguing that the house they own is their PPR and not the place where they actually live for 5/7th (or any other portion of your choosing) of the week.
Will Revenue entertain this argument? Yes.
Is there a chance the individual will be successful? Yes.
Is it 100% guaranteed they will be successful? No.

Rationale: For trying to argue that your property owned is not your PPR? Plenty, however advice on Property Tax Planning is prohibited here.

So as previously requested please provide legislative reference where it says a B&B / rented accommodation CANNOT be deemed to be your PPR, which was the original post which was declared nonsense.

The above legislation clearly states that any one of two or more residences can be deemed a main residence. Main residence = PPR.

sunnysoutheast

adrianw wrote: »

Once again, I will refer to my original post which stated that even if an individual owns a property but lives elsewhere, the second property even if this is B&B can be deemed to be their PPR.

Legislative reference previously provided Sec 604 states:

For the purposes of this section, an individual shall not be treated as having more than one main residence at any one time and in so far as it is necessary to determine which of 2 or more residences is an individual's main residence for any period—


(a) that question may be determined by agreement between the inspector and the individual on the latter giving notice in writing to the inspector by the end of the year 1975-76 or within 2 years from the beginning of that period if that is later, and


(b) failing such agreement, the question shall be determined by the inspector, whose determination may be as respects either the whole or specified parts of the period of ownership in question.

Does the legislation say that a Residence = house you own? no.
Is it possible to live / reside in a B&B? Yes.
Would this be enjoyable? Probably not.
Does this matter from a legal standpoint? no.

Some people are completing missing the point and are arguing that the house they own is their PPR and not the place where they actually live for 5/7th (or any other portion of your choosing) of the week.
Will Revenue entertain this argument? Yes.
Is there a chance the individual will be successful? Yes.
Is it 100% guaranteed they will be successful? No.

Rationale: For trying to argue that your property owned is not your PPR? Plenty, however advice on Property Tax Planning is prohibited here.

So as previously requested please provide legislative reference where it says a B&B / rented accommodation CANNOT be deemed to be your PPR, which was the original post which was declared nonsense.

The above legislation clearly states that any one of two or more residences can be deemed a main residence. Main residence = PPR.

So this section clarifies the situation when an asset is being sold, and whether it qualifies for PPR relief for CGT. Is that correct?

However, as I said previously, the part of your original post that I do not agree with (and in the interests of keeping the discussion civil I am happy to apologise for using the overly harsh word "Nonsense") is the contention that simply because a person stays away from home during the working week this means that their "main home" is not then considered to be their PPR, both for the purposes of CGT relief and for the operation of the rent-a-room scheme. I have seen nothing, anywhere, that supports this view and I know many people who have sold houses as PPRs without issue having travelled away for work for years.

Of course, as I understand it, someone can nominate another owned property, rented property, B&B, hotel, hen house as their PPR if they want but if they do not their "main home" will remain as their PPR.

The other question is when the Revenue would actually be involved. When selling property - yes. Possible with an inspection as defined above.

In the scenario outlined in the thread - Person A keeps main home but works away, Person B rents room under rent-a-room, Person A puts rent as exempt on tax return. When do Revenue get involved here?

adrianw

Thank you,

So this section clarifies the situation when an asset is being sold, and whether it qualifies for PPR relief for CGT. Is that correct?

Yes as it does not say the PPR has to be a house / apartment / other form of accommodation.

Most people who own a property 'down the country' and rent and work in Dublin are generally deemed to have their main residence / PPR as the house down the country where the wife and kids live.

The reason a rented house could be deemed a main residence is to prevent someone buying a 4 bed house, renting out 3 bedrooms, leaving the box room empty and claiming it as their PPR, while living with the folks or other half elsewhere to avail of the Rent a Room Relief.

Revenue need to have legislation they can reply on to prevent abuse.

In the scenario outlined in the thread - Person A keeps main home but works away, Person B rents room under rent-a-room, Person A puts rent as exempt on tax return. When do Revenue get involved here?

The individual who owns the house does need to declare it even though it is exempt. Revenue do not check every self declared income tax return, however if they were to check, evidence to support a claim would need to be supported by petrol receipts to fund a round trip from Dublin to Galway or train tickets, Car service history with record of mileage, money withdrawn from the drink link in both cities or other evidence to show you are commuting at the weekend.

adrianw

adrianw wrote: »

The reason a rented house could be deemed a main residence is to prevent someone buying a 4 bed house, renting out 3 bedrooms, leaving the box room empty and claiming it as their PPR, while living with the folks or other half elsewhere to avail of the Rent a Room Relief.
.

I dont think the above is a good example of the reasons for revenue enforcing a PPR requirement as this scenario would be virtually impossible to police. What a lot if not most people who are abusing the rent a room are doing is what you describe above but then rent or own another house.

If the person is living at home so paying no rent or living with a partner and again leaving no record at all that they live anywhere bar the house they own it would be next to impossible for revenue to find out, compared to it being much easier if the person is living their live somewhere else, paying rent, correspondence registered etc.

filbert the fox

Angelina Mango Tutor wrote: »

I dont think the above is a good example of the reasons for revenue enforcing a PPR requirement as this scenario would be virtually impossible to police. What a lot if not most people who are abusing the rent a room are doing is what you describe above but then rent or own another house.

If the person is living at home so paying no rent or living with a partner and again leaving no record at all that they live anywhere bar the house they own it would be next to impossible for revenue to find out, compared to it being much easier if the person is living their live somewhere else, paying rent, correspondence registered etc.

I'm glad someone highlighted this outrageous injustice which is the TAX FREE rent a room scam.
Genuine landlords are crucified with charges/marginal tax/ prsi/ usc/ prtb/ etc. whereas it now emerges that the scheme is open to abuse.... There should be a level playing field - reduce the landlord tax and introduce the rent a room tax so we can all have a just system.

filbert the fox

filbert the fox wrote: »

I'm glad someone highlighted this outrageous injustice which is the TAX FREE rent a room scam.
Genuine landlords are crucified with charges/marginal tax/ prsi/ usc/ prtb/ etc. whereas it now emerges that the scheme is open to abuse.... There should be a level playing field - reduce the landlord tax and introduce the rent a room tax so we can all have a just system.

The majority of people doing rent a room dont abuse the system the same as the majority of landlords dont.

Most people do it to help with their mortgage and live in the house with the people or possibly live away for part of the week for work (which is fine too). This is very different to a LL as the person is sacrificing their privacy, they have a stranger living in their home and dont have full use of it etc where a LL is operating a business.

I think it would be madness to remove the rent a room scheme. It would help nobody and would gain very little extra income for revenue as people would just not bother renting a room (and thus reduce availability and increase rents elsewhere) or they would just operate cash in hand and not pay the tax anyway.

athtrasna

This thread has gone dreadfully off topic and has been monopolised by a few posters. Please take it to PM rather than continue to derail this thread.

Mod