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Rent out a property and live/rent in another property

  • 04-08-2016 10:48am
    #1
    blackbelted
    Registered Users, Registered Users 2 Posts: 41 ✭


    My dilemma is I don't want to buy an expensive property (nearly all properties are expensive in Dublin now) Instead, I would like to buy a small place upto 200K mortgage free and rent it out. With the rent I get from there, I may add few hundreds more and rent/live in my dream place which I cannot afford to buy without mortgage.

    Do I still have to pay income tax eventhough I am living in a rental property? If yes, it's not really fair.

    Can anybody help here what are the risks in this plan?
    Tagged:


Comments

  • #2
    Michael D Not Higgins
    Registered Users, Registered Users 2 Posts: 7,223 ✭✭✭Michael D Not Higgins


    Yes you have to pay income tax on the rent earned from the other place at your marginal rate. Rent paid is not a deductible business expense in relation to the other apartment/house.


  • #3
    bmwguy
    Closed Accounts Posts: 2,006 ✭✭✭bmwguy


    The following assumes that you earn 33000 or more a year.

    If you rent out a house for 1500 Euro a month you will pay approx 50% of that in tax netting you 750 a month.

    If you want to rent somewhere to live for 2000 a month you will have to find 1250 from other income to do this.

    Throw your own numbers in there, it very rarely makes sense.


  • #4
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,815 ✭✭✭antoinolachtnai


    Not only do you have to pay income tax, but you have to pay capital gains tax when you sell the property.

    Your best option could well be to get a mortgage to buy a house you want to live in.


  • #5
    machalla
    Registered Users, Registered Users 2 Posts: 1,523 ✭✭✭machalla


    A couple of links that may be useful in understanding what you face as a landlord.

    http://www.knowyourtax.ie/landlords/

    https://www.taxback.com/blog/irish-landlord-expenses

    Another option to investigate is the rent a room scheme which allows you to rent out a room in your home tax free for up to €12,000 per year tax free (please correct me if the figures are incorrect). If you can find someone to pay that kind of money of course.


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