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To extend or not to extend, that is the question

  • 26-07-2022 8:34pm
    Registered Users Posts: 237 ✭✭

    I inherited a house ten years ago. My uncle, who's in his eighties, lives with me. The house is a dormer bungalow with four bedrooms, a master with an en suite, a box room and two other bedrooms. The house is in a decent area (Malahide in county Dublin), handy enough for the Dart. It was built in the seventies and is showing its age, so since I'm on disability and my income is not high, I thought it would be a good idea to rent the extra bedrooms out. So I'm in the box room and obviously my uncle has the master as the en suite is convenient for him. Slowly I've been doing up the house, installing insulation, replacing the bathrooms and the glazing, things like that. The people we have renting from us are very good housemates and they have been no trouble at all. I'm renting to them under the rent-a-room scheme.

    Recently I had the idea that it might be possible to extend the house. It has a big back garden. I talked to a couple of builders and was told that to build an extension the maximum size that is possible without planning permission would hold three bedrooms and would cost around 100k, which I don't have. Possibly I could ask the credit union for a loan and it is possible they might agree. I think though that if it all works out and I can get the loan and get it built, and then find people to rent those extra rooms, that the tax I've have to pay might make the whole project unfeasible. There might be insurance or other implications too that haven't occurred to me. So I'm not sure this is a good idea.

    I would appreciate advice.


  • Registered Users Posts: 2,554 ✭✭✭...Ghost...

    Home improvement loan for 100k over 7 years at 9% is circa 1600 per month. You'd be paying half the rent in tax and you'd have a lot more bodies living with you. It wouldn't be something I'd do. Consider your existing tenants before adding 3 to 6 more people to the home as well as all the major building works.

  • Registered Users Posts: 9,592 ✭✭✭antoinolachtnai

    You would be lucky to build three beds for that price to be honest. And if you ran over-budget what would you do?

    the tax issues (and also impact on your claim) are also large.

    you also have to take into account disturbance of your elderly relative during the build. And you are going to lose some rent during the build.

    at the end your home might feel like a boarding house and you would be under pressure to get tenants and make payments as you rightly say.

    And it might not add a lot of value to the house if it was not done to a very high standard.

    if you have spare cash I would continue to try to find other projects to improve the comfort and value of the house. Every job you do, try to get it dove to the highest standard you can

  • Moderators, Society & Culture Moderators Posts: 32,274 Mod ✭✭✭✭The_Conductor

    Agree 100% with Antoinolachtnai on this one.

    Once you go over the rent-a-room threshold, all of your rental income is taxable (you don't get the first tranche tax free as you do at the moment).

    The main beneficiary of a boarding house type scenario (which is what you are suggesting) would be the tax man.

  • Registered Users Posts: 5,977 ✭✭✭Claw Hammer

    It would be madness to extend. Adding more bedrooms might devalue the house! Extensions are notorious for going over budget. If money is tight or the builder bad, or both, you could be left with a half finished extension which you can't get funds to complete. Add that to the tax implications of increasing the rental income. If you are contemplating an extension better ask a local auctioneer about they type of extension which would enhance the house. A friend of mine took out the en-suite and put in a bedroom in the space and gained income that way. You could also consider an attic conversion.

  • Registered Users Posts: 5,343 ✭✭✭Gusser09

    Talk to an Architect or Engineer.

    Have you looked at the housing adaptation grant? You should look at putting in a disabled shower room for you/uncle. You should qualify for that and it'd be worth around 30K to you.

    It would be a 7 bed house if you put on 3 bedrooms? That's mad to be honest. Why not look at putting on one decent size disabled bedroom / wet room.

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