Apr for a letter property and tax relief

adam88

Hi all.

Just a quick question, does it matter what rate of interest your being charged on a mortgage for a buy to let.

I currently have my house mortgaged with the credit union 5.5 %. I’m moving out to another property with much lower interest rates and will be renting out the original house.

I’ve spoke to the credit union and they’re happy to maintain the loan and for me to rent it out. Rent will more than pay the old mortgage. Just wondering am I better off to move it to a lower rate with a bank or stay as I am. After all the interest can be written off.

I think I know the answer to this question, it’s just that I think I might be missing something

Samuel T. Cogley

Have you checked out the banks BTL rates? You can't avail of standard rates if it's a rented property.

adam88

Samuel T. Cogley wrote: »

Have you checked out the banks BTL rates? You can't avail of standard rates if it's a rented property.

I’m aware of that. My new house is being lived in by me and I’m getting standard rates. The btl rates are cheaper than the credit union but I’ve the added hassle of moving the mortgage and if it makes no difference what the rate is due to it being written off, I’m happy to let it with the credit union and writing it off at the end of the year.
What I’m asking is does it matter what the rate is if it is written off anyway

Samuel T. Cogley

adam88 wrote: »

I’m aware of that. My new house is being lived in by me and I’m getting standard rates. The btl rates are cheaper than the credit union but I’ve the added hassle of moving the mortgage and if it makes no difference what the rate is due to it being written off, I’m happy to let it with the credit union and writing it off at the end of the year.
What I’m asking is does it matter what the rate is if it is written off anyway

Yes as it's a) a relief not a write off b) currently only at 80% (although it's set to go to 100% by 2021 IIRC) of the interest.

I'm surprised you're finding a significantly better APR but I accept that you have.

adam88

4.5% with Ulsterbank.
If it’s relief does it matter what the rate is

Samuel T. Cogley

adam88 wrote: »

4.5% with Ulsterbank.
If it’s relief does it matter what the rate is

Yes as you're not recouping the full amount only off setting the amount you pay tax on.

Samuel T. Cogley

I resist doing the sums as I'll no doubt get them wrong but to illustrate the point:

Let's say you're renting at 1000 per month.

Gross Rent 12000
Expenses 3000
Total taxable rent 9000
Less 50% tax PRSI ect. (rough figure)
= €4500 net income

Gross Rent 12000
Expenses 2000 (New lower APR)
Taxable Rent 10000
Less 50%
= €5000 net income

dubrov

Assuming you are paying the top rate of income tax and 80% interest write off, you are still paying effectively about 60% of the interest rate.