Your property questions answered
What happens if we rent out our home?
Q We need a bigger house (one child, another on the way) and there is no point putting our house on the market as there are houses in our estate which have been for sale for over a year. Our plan is to rent out the house and rent a larger one in the same area. The rent won’t cover the mortgage so we will have to make up a small shortfall, so in other words we will make a loss so it shouldn’t concern the taxman. But are there any other tax/official issues we should know about?
A As a grown-up you should know that there are very few money related transactions that don’t interest the taxman. Basically you will have to pay tax on your rental income, although you will be able to offset certain expenses against your tax bill. Look at revenue.ie for a list of deductable expenses.
There are many implications in renting out your principal private residence. You can’t claim TRS (mortgage relief) and you should inform your lender. If you are on a tracker mortgage, your lender may jump at the opportunity to move you off it, which will increase your shortfall. You must register with the Private Residential Tenancies Board (PRTB) and you can then offset your mortgage interest against your rental income. Inform your house insurer.
If you have owned it for less than two years and, as a first-time buyer didn’t pay stamp duty, there will be a clawback, and if in the future you decide to sell this house, you will have a capital gains tax bill. Landlords can get advice from the Irish Property Owners Association at ipoa.ie. On the upside, as a renter you will be able to claim a small tax relief. The various reliefs that pertain to property may change in the Budget so keep an eye on that. The other upside of course, is more comfort and space for your growing family.
Swap not shop?
Q We need to move to Dublin for work reasons and would like to swap our Cork house for a Dublin house as it seems sensible. Any ideas on how to find a likely swappee?
A It’s not going to be easy and in the end you may be better simply trying to sell your house and starting afresh looking in Dublin, knowing how much you have to spend. However, if you are determined to find a swap, you could advertise on a specialist site such as swapyourhome.ie although looking at the offers on that site most swappers either want to swap in their own area or have expressed no preference which seems slightly strange for someone intent on swapping. You could advertise on one of the many trading sites, i.e., gumtree.ie – and update your listing continuously – or indeed advertise in this paper, but be prepared for a long, time-consuming process.
You should also exploit your network of friends and colleagues as word of mouth is invaluable. Talk to your local auctioneer (you will need a valuation on your house anyway) on the off-chance that he has had enquiries from buyers in Dublin who have to move to Cork. But really, unless you get very lucky, swapping is all very haphazard and if there is a deadline on your move, it might prove an impractical option.
Your questions
Send your queries to Property questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or email propertyquestions@irish-times.ie. This column is a readers’ service and is not intended to replace professional advice.
