Home economics: Sinead Ryan answers your property questions
I am letting out a house I own for the first time. I have fitted it out with furniture, which is sturdy but not expensive, and just prints on the walls, Ikea fittings, etc. My question is about insurance. Should I maintain contents cover on my policy on the house or is it enough that my tenants do this? I see little point in having two sets of insurance in place for the same thing. Do I need to inform the insurer I'm letting the property?
A: As to your second questions, yes - it's very important that you let your insurer know the property is being let. Jonathan Hehir of InsureMyHouse.ie explains why: "This will impact on the type of home insurance policy you have. If you do not inform your insurer, you are running the risk that if something were to happen and you needed to make a claim, the insurer would be entitled to refuse to pay out based on the fact that the terms of occupation of the house had changed. It is considered a 'material fact' in insurance terms and you don't want them repudiating a claim for want of a phone call.
"With reference to the "double insurance", you mention - in short, if you want your furniture to be insured, then yes, you will also need contents cover. However, you should be able to reduce the amount of contents cover you currently have in place as presumably all personal effects will have been removed so there will be no expensive 'all risks' for things like laptops and bicycles and jewellery. The building insurance will have to remain in place and most polices will cover property owners' liability, which is very important."
If your tenants wish to take out renters' insurance for their personal possessions, they can, but they don't have an obligation to, and you shouldn't rely on it.
Don't forget also that you need to register with the Residential Tenancies' Board (rtb.ie).
Q. We own a family apartment in Spain. We don't officially let it out but, from time to time, our adult children have guests staying and stay themselves. We all put money for general upkeep into a bank account in Spain, and non-family guests often insist on paying us something, so it goes in there too. I'm concerned about Revenue's ruling on foreign assets - do we need to declare this? It's not really 'rental income' in the proper sense but amounts to around €6,000 a year and currently has a balance of €19,800.
A. It may be tempting to treat unsolicited payments from guests as an unconnected gift, but it's by no means certain that the Irish (and Spanish) authorities would agree, says Taxback.com's Barry Flanagan - so you may prefer to take the prudent position that this constitutes taxable income, rather than becoming embroiled in a dispute with either revenue authority. He adds, "If the owner of a Spanish property is Irish resident and domiciled and is in receipt of income earned from renting out a foreign property, this would be considered taxable income in Ireland, which is reportable as Schedule D Case III income. However, any expenses incurred when renting the property can be offset against this income, such as mortgage interest (if any), utility bills, maintenance and management costs, etc.
"If this income is reported in Spain and Spanish income tax is paid, this may be available for use as a foreign tax credit against the Irish income tax. Given the amounts involved appear quite small, there may not be a rental profit to tax here under Irish rules. But regardless of the level of foreign rental income earned, the owner will have an obligation to file a tax return and report it, as well as the expenses which are reducing or eliminating the liability. Your position in Spain should also be examined and local Spanish expertise engaged to review any obligations that may arise there."
The Ryan review
Finally, murmurings are being heard about scrapping the ill-conceived first-time buyers' grant.
Or perhaps new housing Minister Eoghan Murphy is just trying to find an easy mic.
Certainly, in announcing something which he may or may not do, he will in the short term anyway just bolster even higher demand for a scheme which has already cost the rest of us taxpayers a fortune.
With 7,000 applications to date, competing for a handful of new houses actually being built - and which self-builders are using with alacrity - there was only ever going to be one sure result: the driving-up of prices, which is the exact opposite of what was needed or intended. Ho hum.
House-price inflation is now 10 times that of other goods, at 10.5pc. The only thing the newbie Minister can expect now is a hike in rushed applications while he gets his feet under the table.
On the plus side, if it is scrapped that will be a good thing. FTBs have been a pretty cosseted lot and would be better served with incentives to fund more building - rather than with direct taxpayer props.
Perhaps Mr Murphy might mirror his decision on the FTB scheme with a move to bring forward the vacant land tax, which was disgracefully pushed out to 2018 amid anguished lobbying.
It's time to start dangling sticks instead of carrots to reluctant landowners.