The accidental landlord
Like many who bought an apartment in the last few years, Laura Noonan is renting out her home. But, it’s not a straightforward process and owners need to lay the groundwork with the banks and the taxman
IT'S hard to imagine a complete stranger cooking in my seldom-used galley kitchen. It's even harder to imagine that same stranger showering in my ensuite or lounging on my Buddha bag.
But in a couple of weeks' time, that's exactly what will be happening, if everything goes according to plan.
It's almost two years since I wrote in these pages about the joys of buying my first apartment. Now I'm writing about the trials and tribulations of turning that same apartment over to renters.
Mine isn't one of the sad recession stories, however; I'm leaving my apartment by choice, to take up a new job in London.
But just because it was my decision to go doesn't mean it isn't hard to leave.
Even the practicalities are daunting. A friend advises me to talk to a mutual friend who has been letting her place for years. Our friend tells me: "Tell no-one anything -- that's what everyone does."
The "no-ones" she is talking about are the bank and the taxman. Call it survivor guilt for escaping the economic fallout, call it my Catholic upbringing, but I just can't do it.
I ring the (state-owned) bank AIB and ask them what I should do. It doesn't seem like a call they get terribly often. They tell me that the interest rate will move to their 'buy-to-let' rate, which is about 0.7pc higher than what I pay now.
Then I email the taxman to ask about how to unwind the 'tax relief at source' that is currently worth a couple of hundred euro a month, but which only applies to owner occupiers.
The auto response isn't encouraging -- I'm told someone will be back to me within 30 days.
I get a response the very next working day, telling me that to discontinue tax relief at source, all I need do is send them on my PPS number, my address and my bank account details.
It occurs to me that I may well be back in Ireland and back 'owner occupying' before my tax relief would have run its course. If that happens, can I start the clock going again?
A few hours later my Revenue correspondent comes back to me. My tax relief would have run until 2017 -- if I make it back before then, I can claim any outstanding relief.
The most complicated part of the whole thing is how to pay tax on my rental income. From the Revenue's website I find out that I'll be considered a "non-resident landlord", the most complex class of all.
I have two options: receiving the rent directly myself or through an agent.
If I get it directly, my tenant has to withhold 20pc of the rent from me and pay it directly to the Revenue.
I can't imagine explaining this to a tenant and trying to ensure they comply, so I quickly rule it out.
Option number two is to get the rent through an agent who is resident in Ireland. That way, the tenants pay the full rate to the agent, and the agent withholds a portion of it to cover the tax bill due at the end of the year.
That tax bill will be based on the income I get from the apartment, less 75pc of the interest, less allowable deductions like maintenance, wear and tear and management fees.
Since I'm a non-resident with no other Irish income, the tax rate will be 20pc.
I know people who have used friends and family as "agents". To me it all sounds a bit messy, so I decide to go with an actual agent, who will handle the money for me and deal with any tenant issues for a fee of 6pc of the rent, plus VAT.
It's spending that could probably be avoided, but to me it's worth it to avoid the hassle of dealing with tenants' blown light bulbs.
I feel like I've been at this forever and I'm only half-way there. I still have to throw some paint on the walls and generally make the place tenant-ready. I still have to transfer across all the utilities, find the tenants and navigate the PRTB. It seems like a lot of hassle to go through only two years after I bought.
That, plus the fact that the place probably has fallen in value, might make lots of people think I'd be better off it I hadn't claimed my very own toxic asset.
They'd be wrong though. The apartment isn't just bricks and mortar and shiny granite -- it's an anchor, it means I've put down roots, it means I'm coming back.
In a couple of weeks' time, there may be strangers showering in my apartment, but it will still be my home.