Dominic Coyleanswers questions from readers about thier personal finance issues.
Q:Q I PURCHASED an apartment (as my principal private residence) in 2003 and received mortgage- interest relief at source as a first-time buyer until I rented it out in July this year. My husband bought a house (as his principal private residence) and began to receive mortgage-interest relief as a first-time buyer in 2005.
My husband and I married this month and we live in the second property. How are two people, who have both purchased their first homes as individuals, treated for the purposes of mortgage-interest relief in the event of moving into one house and renting the other following marriage?
Does the fact that this effectively becomes one spouse's second home render them both non-first-time buyers? Is my husband still entitled to mortgage-interest relief at the first-time buyer rate?
Ms S.C., Limerick
AFirst-time buyer status is a delicate thing. If, for instance, your husband had bought his property with you in 2005, neither of you would have been able to avail of first-time buyer status as you already owned a home.
As each of you bought your first properties in your own right, you were, of course, entitled to first-time buyer status. But what now?
I spoke to the Revenue Commissioners and the good news is that you are not likely to lose your first-time buyer status. Revenue points out that the first-time buyer's status applies for the tax year in which the mortgage is drawn down and a further six years. In your case, you received tax relief at source (TRS) as a first-time buyer from 2003 until you rented out your home earlier this year.
Revenue tells me this first-time buyer's status is now transferred to your husband's property, where you moved following the wedding. You will continue to be treated as a first-time buyer for the rest of the 2008 tax year and for 2009.
Revenue suggests you contact the TRS on LoCall 1890-463626 to inform them of your change in circumstances - notwithstanding the fact that you have already notified Revenue of your move to rent your own home.
After 2009, you will continue to receive tax relief at source, but not as a first-time buyer.
As far as your husband is concerned, his first-time buyer status is unaffected and he will continue to be treated as a first-time buyer until his seven-year term expires at the end of the 2011 tax year, assuming he continues to own the property and make his regular mortgage payments.
QI was reading the answer to last week's question regarding inheritance tax and capital gains tax (CGT) and I hope you will not mind me pointing out two minor corrections:
1. You can own as many houses as you like for the principal private residence CGT exemption but one of them has to be your nominated private residence.
2. The €3,000 annual gift allowance does not apply to inheritances. It is only available against gifts.
Mr C.M., e-mail
AApologies on the €3,000 issue. You are quite right that it applies only to gifts and not to inheritances, both of which are taxed under the capital acquisitions tax code.
On the first issue, my understanding from Revenue is that, for tax purposes, you have only one principal private residence - hence the use of the term "principal". I accept you can own as many homes as you want for your own personal use.
• Please send your queries to Dominic Coyle, QA, The Irish Times, 24-28 Tara Street, Dublin 2 or by e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering questions.
