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Rental Property Not Rent - How is the loss treated?

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  • 07-07-2020 8:36pm
    #1
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,204 Mod ✭✭✭✭


    Assuming a property has been rented for a number of years with tax paid. In normal circumstance rental property has income coming in, expenses due and tax to be paid on the profit.

    What happens if the property isn't rented due to market conditions for example?

    Is my under standing correct that this loss can be offset against your PAYE income tax? If so how long can this loss be sustained (assuming that the owner can still pay his mortgage/other expenses)?


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    #2
    plhealy2000
    Registered Users Posts: 87 ✭✭plhealy2000


    The loss can only be used against future rental profits. It can't be used against PAYE income.


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    #3
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,204 Mod ✭✭✭✭godtabh


    plhealy2000 wrote: »
    The loss can only be used against future rental profits. It can't be used against PAYE income.

    OK. Clearly I misunderstood!

    Would it have any bearing on CGT?


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    #4
    y0ssar1an22
    Registered Users Posts: 16,168 ✭✭✭✭y0ssar1an22


    godtabh wrote: »
    OK. Clearly I misunderstood!

    Would it have any bearing on CGT?

    no, rental losses are ring fenced. you can only use them against future rental profits


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    #5
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    godtabh wrote: »
    OK. Clearly I misunderstood!

    Would it have any bearing on CGT?

    No.

    There's no tax angle to be worked by depriving yourself of income from an asset capable of earning an income. Yes, if you let it there'll potentially be tax due on the profit for tax purposes. You are down money, both pre- and post-tax, if you choose to not let it.


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    #6
    okidoki987
    Registered Users Posts: 10,618 ✭✭✭✭okidoki987


    Does it have any bearing on the numbers of years for CGT when it is no longer your principal residence and not rented?

    So you own a house 10 years, move out, let it for 7 years and then it's unrented for 3 years after and then sold.
    So when CGT is worked out, total is 20 years.
    So is it 7/20ths of the profit (assumed) when sold or 10/20ths for CGT calculations?
    Does Revenue count the 3 years unrented as non CGT years or as it's not your PR, does it count whether it's rented or not?


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    #7
    y0ssar1an22
    Registered Users Posts: 16,168 ✭✭✭✭y0ssar1an22


    okidoki987 wrote: »
    Does it have any bearing on the numbers of years for CGT when it is no longer your principal residence and not rented?

    So you own a house 10 years, move out, let it for 7 years and then it's unrented for 3 years after and then sold.
    So when CGT is worked out, total is 20 years.
    So is it 7/20ths of the profit (assumed) when sold or 10/20ths for CGT calculations?
    Does Revenue count the 3 years unrented as non CGT years or as it's not your PR, does it count whether it's rented or not?

    relief = period of occupation/period of ownership (at its most simple level).

    it only counts the times where you actually lived there. so 10 years in the example above.


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    #8
    tanit
    Registered Users Posts: 325 ✭✭tanit


    y0ssar1an22 wrote: »
    relief = period of occupation/period of ownership (at its most simple level).

    it only counts the times where you actually lived there. so 10 years in the example above.

    Plus the last year that will be considered that you have been living the last year in the property.

    Principal Private Residence Relief

    In any case from Revenue's point of view if you are not renting you are not making any losses, you have an asset you are not using for an economic activity so you cannot have any losses (this also applies from the accountancy point of view also). You would need to have rental income that is lower than your expenses to actually have a loss and like the previous posters you have told, if you have losses they will be ringfenced and you would only be able to use them against Case V income Rental Income only.


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    #9
    Marcusm
    Registered Users Posts: 10,215 ✭✭✭✭Marcusm


    y0ssar1an22 wrote: »
    relief = period of occupation/period of ownership (at its most simple level).

    it only counts the times where you actually lived there. so 10 years in the example above.

    The last 12 months is always treated as PPR if you have ever had it as PPR so 9/20ths for that example.


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