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Increasing mortgage on rental to offset PPR

  • 19-03-2019 5:19pm
    #1
    kramyerac
    Registered Users Posts: 9 ✭


    Not sure where to go with this but maybe someone can advise?

    Recently purchased a house and am now in a position where i keep and rent out my apartment (no market for sale). I only have a small mortgage on the apartment with a larger mortgage on my home. Is it possible to increase my apartment (rental) mortgage by say 50k and use this 50k to clear a portion of my home mortgage? The increased rental mortgage can possibly yield some benefit in the form of interest relief on rental taxes due. Yes in hte end i'll pay similar but is this a viable option?

    Maybe i'm talking rubbish but grateful for (friendly) advice :)


Comments

  • #2
    wench
    Registered Users Posts: 1,629 ✭✭✭wench


    No, you can't get a tax benefit that way.

    Only the money used to purchase the rental property can be offset against tax.
    Which property it is secured against is irrelevant.

    Also, the rate on a buy to let mortgage would usually be higher, so no point in paying more by moving the loan.


  • #3
    kramyerac
    Registered Users Posts: 9 ✭kramyerac


    Thanks - interesting. So in the (hypothetical) event that you re-mortgaged/re-financed with the intention of carrying out work in the rental property then decided (out of the blue!) rather than carry out the improvements in the rental property you would instead offset the amount on your PPR mortgage is that a no-no? Or are you heading down a road you don't want to go with revenue etc.?

    I'm not going to be doing this in any case as re-mortgaging and moving money about the place seems like a lot of trouble for what would in effect be little reward and i'm looking to sell when an opportunity presents itself given costs involved but theres not much information available.


  • #4
    wench
    Registered Users Posts: 1,629 ✭✭✭wench


    That would be tax fraud. The Revenue don't much care for it.

    Taking the loan and changing your mind is fine. You just can't claim it on your tax return.


  • #5
    kramyerac
    Registered Users Posts: 9 ✭kramyerac


    :D i thought so...would have gotten away with it too if it weren't for those pesky revenue kids


  • #6
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    kramyerac wrote: »
    :D i thought so...would have gotten away with it too if it weren't for those pesky revenue kids

    Damned clever Revenue kids. They keep us all on the straight and narrow.


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  • #7
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    Personally I would imagine this type of tax fraud is not uncommon-remortgage the rental for the money to do up the PPR. My accountant here in Germany told me it's common enough here too (she nearly cried when I told her I had a mortgage on the PPR here but none on my rental but that's just how things panned out), though severely punishable of course. It would be even harder to police in Ireland, given the amount of times the government has changed the rules around what percentage of mortgage interest is actually deductible!

    Obviously it is not something anyone should do.


  • #8
    Claw Hammer
    Registered Users Posts: 6,152 ✭✭✭Claw Hammer


    What is very common is people spending money on the PPR and billing it to the rental; furniture,repairs, carpets painting etc. If it is relatively minor in nature it is virtually undetctable.


  • #9
    [Deleted User]
    Posts: 0 ✭[Deleted User]


    Claw Hammer wrote: »
    What is very common is people spending money on the PPR and billing it to the rental; furniture,repairs, carpets painting etc. If it is relatively minor in nature it is virtually undetctable.

    It’s not really isolated to rentals though the vast majority of people who have a business will try get fiddle tax to some degree or other as in many cases it’s almost impossible to detect. From the lad putting vat reclaimed diesel in the family car, to the rental house owner who claims furniture expenses for stuff he puts in his ppr to the business owner who puts other private expenses theough the business etc. It’s all very common.


  • #10
    paul71
    Registered Users Posts: 3,099 ✭✭✭paul71


    Decker Handsome Shorts wrote: »
    It’s not really isolated to rentals though the vast majority of people who have a business will try get fiddle tax to some degree or other as in many cases it’s almost impossible to detect. From the lad putting vat reclaimed diesel in the family car, to the rental house owner who claims furniture expenses for stuff he puts in his ppr to the business owner who puts other private expenses theough the business etc. It’s all very common.

    You are correct it is very common. What may surprise you is how often it is caught and punished by 100% penalty on top of the tax due plus 8% interest rate.


  • #11
    Claw Hammer
    Registered Users Posts: 6,152 ✭✭✭Claw Hammer


    paul71 wrote: »
    You are correct it is very common. What may surprise you is how often it is caught and punished by 100% penalty on top of the tax due plus 8% interest rate.

    Some people are stupid, trying to claim an obviously domestic item as a workplace expense. Some of the more minor claims tend to balance out against the fact that some genuine items of expenditure are not deducted or deductible.


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