Mobility - renting out PPR and renting somewhere else

notAMember

What are the tax implications of renting out my principal primary residence, while I and family move to somewhere else and rent for work?

For example: House has 1500 pm mortgage, and rent expected would be 2500 pm. We want to rent somewhere comparable but in a different county, for a similar ~2500 pm for a few years, then return to it.

Would I be liable for the 42% tax on the rental income still, or is there any allowance for it being our PPR?

Any Capital Gains considerations while we are renting it out?

Any tax credit for this arrangement available? (relief on the rent I would be paying)

Geuze

There is no 42% tax rate in Ireland.

Tax rates are 20% and 40%, plus there is USC tax, and 4% PRSI.

Yes, you may be liable for income tax on any rental profits made.

It makes no difference that it used to be your PPR.

There is no tax relief on the rent you pay elsewhere against the rent earned. However, isn't a rent tax credit being introduced for 2023?

CGT takes account of time spent as PPR.

HeidiHeidi

You'll be getting €2500 in rent, but losing basically half of that to tax/PRSI/USC, assuming you're in the higher tax bracket already (minus expenses, but they're spread over a number of years for tax purposes). Will that even cover your mortgage?

You'll be paying €2500 rent, out of your taxed income.

You'll be subject to all the limitations of renting, including notice periods which are huge after a couple of years, and will be liable for all repairs/maintenance etc (tax deductible).

You run the risk of having problems getting tenants out at the end of it. It's only a minority, but if it happens it can be a nightmare - boards is littered with threads on this theme.

CGT will apply for the period that the house is not your PPR (or most of it, I'm not 100% sure, I think there's a year's grace at the start or end of the period?)

It'll be an expensive exercise if you do it.

notAMember

Ok thanks.

That’s what I thought happened here alright, I have several rental properties already, but wondered was there another category for PPR. Seems not.

I also have the option to declare that rental income in another country , I spend enough time outside Ireland to choose to be tax resident there, and there is a double taxation agreement. Their tax on rental is substantially lower, probably makes more sense to do it that way.

relax carry on

https://www.boards.ie/discussion/comment/119755705#Comment_119755705

Ireland retains taxing rights on the income generated from properties here. You'll get a credit for any Irish tax paid on the rental income in the country where you'll be tax resident.

https://www.revenue.ie/en/property/rental-income/non-resident-landlords/index.aspx