Out of financial necessity a holiday home which we bought exclusively for our own use will have to be rented out. We have no idea where to start or what obligations we would have tax wise. Can you help?
Between the second home charge and the property tax, running a holiday home which is largely unoccupied for most of the year is certainly expensive, so renting it out is a great way to cover those costs.
Registering with a holiday website which specialises in lettings is a good way to get noticed. Have some professional photos taken to show off your property, and a listing of local amenities. You may need to spend to get mod cons installed.
Small ads in newspapers or with local estate agents are also effective.
Do bear in mind your insurance may have to be upgraded, so get advice from a broker on this.
You will also need to register with the Private Residential Tenancies Board as a landlord.
Rental income is taxable. If you are PAYE with relatively low rental income you can have it collected by reduction of your tax credits or standard rate cut-off point, which may suit you.
You are required to complete form TR1 when you are in receipt of income other than PAYE.
Louise Carey of www.taxconsultant.ie adds, "Under Self-Assessment you file via your tax return in the normal way and offset your rental income by allowable deductions such as ground rent, maintenance, general repairs, insurance, management fees, service charges, advertising, accountancy fees and wear and tear of furniture and fittings.
The allowance for depreciation is 12.5pc per year over eight years.
A landlord cannot claim for his own labour. Rental losses on property in the State can be carried forward and can be offset only against rental income from property in the State".
We need more room. My wife wants us to build an extension but I think an attic conversion would be cheaper. The problem is the mortgage. We need a loan, but have a tracker. Would the bank force us onto a variable loan if we applied for a top up and for how much?
Good luck with the discussion on space – I won't get involved in that one, but do make sure your ducks are lined up with planning permission and cost quotes.
Allow for double the time and more money than you expect in any event.
A tracker is a valuable asset. By effecting a top up loan, you are breaking the original contract and it may constitute a 'new' mortgage which would, invariably, be a variable as trackers are no longer available.
However, it's definitely worth negotiating with your bank. Some offer a split facility to good customers, ie the original tracker is kept but a top up loan is made by way of a variable mortgage.
This would only be available with the bank which has the main mortgage, but it shouldn't be a problem. Contact a good mortgage broker to steer you through. DIY mortgages, as with alterations, are not for amateurs.