Is this idea legal ?

sunnyday1234

Hi All

Lets say i have a rental property and a PPR with mortgages on both (much bigger mortgage on the renal property)

No income tax due on the rental currently as the interest on mortgage is high enough to wipe out any tax due

As the mortgage on the rental property comes down and tax becomes due (and gets larger every year) - is it possible then to jack up the mortgage again on the rental and use this cash to pay off the mortgage on the PPR

This would enable PPR to be mortgage free and no interest due again on the rental

Obviously a lot of number crunching would be needed i.e. how much repayments wouuld go up etc on the rental

I was just wondering if this idea is even allowed?

wench

No, tax relief is determined by the purpose of the loan, not what property it is secured against.
So you can only get relief on the money actually used to purchase the rental property.

sunnyday1234

wench wrote: »

No, tax relief is determined by the purpose of the loan, not what property it is secured against.
So you can only get relief on the money actually used to purchase the rental property.

thsnks . Is there any link explaining this ?

wench

https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-allowed.aspx

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-08-06.pdf

interest is not deductible where the loan is obtained on the security of a rented premises but is used for purposes other than its purchase, improvement or repair

sunnyday1234

wench wrote: »

https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-allowed.aspx

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-08-06.pdf

Seems impossible for them to implement this rule. I doubt they would check if anyone in this situation actually used the top up mortgage for house repairs for example and didnt use it to pay down some other debt or spend it on a holiday !

Liam D Ferguson

sunnyday1234 wrote: »

Seems impossible for them to implement this rule. I doubt they would check if anyone in this situation actually used the top up mortgage for house repairs for example and didnt use it to pay down some other debt or spend it on a holiday !

They ask you to declare in writing what percentage of a loan was used for the purchase, renovation or repair of the property in question.

In addition, lenders will ask for proof of what you're using a proposed loan for.

beechwood55

sunnyday1234 wrote: »

Seems impossible for them to implement this rule. I doubt they would check if anyone in this situation actually used the top up mortgage for house repairs for example and didnt use it to pay down some other debt or spend it on a holiday !

Do you really think you know better than Revenue what they can and cannot implement???

wench

sunnyday1234 wrote: »

Seems impossible for them to implement this rule. I doubt they would check if anyone in this situation actually used the top up mortgage for house repairs for example and didnt use it to pay down some other debt or spend it on a holiday !

I take it you've never heard of audits or receipts then?

sunnyday1234

beechwood55 wrote: »

Do you really think you know better than Revenue what they can and cannot implement???

Do you really think that lots of people dont avoid tax in some shape or form and never get caught ?

sunnyday1234

wench wrote: »

I take it you've never heard of audits or receipts then?

no, never heard of either