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Home economics: Answering all of your property questions


Eight out of 10 first-time buyers refused mortgage

Eight out of 10 first-time buyers refused mortgage

Eight out of 10 first-time buyers refused mortgage

I've just moved into a new apartment and my landlord lives abroad. I've been told I have to submit some of my rent directly to the Revenue Commissioners and the rest to his bank account.  I don't understand this - why can't he do this himself?

Answer: The position for tenants renting a residential property from a non-resident landlord can seem something of an anomaly. It is one of the few occasions where an individual is required to pay someone else's tax directly to Revenue, says Barry Flanagan of Taxback.com.

"Revenue judges the risk of non-payment for overseas landlords to be higher than for Irish residents and has acted to ensure at least some of the tax is collected. Tenants must deduct tax at the standard rate of 20pc and pay this over to Revenue. At the end of the year, you will need to furnish the landlord with a completed Form 185 giving details of the amount of the rent that was paid over to Revenue. The landlord can then claim this amount as a credit on his annual tax return.

"However, the landlord has the option to appoint an Irish 'collection agent', who is allocated a second PPS number specific to the property, collects the rent on the landlord's behalf and files the tax return due on the property. You could ask your landlord if he might make this arrangement instead. It's favourable to him tax wise. If not, protect yourself from underpaying - contact your local tax office so your tax credits and rate band can be adjusted to collect the amount due and spread it over the tax year."

We are taking out our first mortgage and had been considering fixing it for three years. However, we see a new 10-year rate on the market - should we go for this instead?

Answer: The new 10-year fix rate is being offered by Bank of Ireland at 4.99pc. With 43pc of first-time buyers opting for some fixed rate, it shows they want the security of repayments that this brings. However interest rates from the ECB have never been lower and are stable, so you run the risk of overpaying in the longer term.

It's a difficult one to call, but I've never been a fan in this column of long-term fixed rates. There's a reason banks offer them and they rarely lose out. The house always wins, as they say.

My gut feeling would be that, while there's nothing wrong with the Bank of Ireland offering, a decade is a long time. You could plump for five years and hedge your bets.

Best of luck with the new home.

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