Your property questions answered
When does tax relief on my mortgage start?
Q As a first-time buyer applying for my first mortgage, I believe you get TRS (mortgage interest tax relief at source) at a higher rate for seven years. If you draw down your mortgage in December and your repayments begin in January, when is your first year for TRS purposes? Is it December (thereby losing all of that year) or January, so gaining the benefit of the full seven years?
A What a timely question and well done for thinking ahead - it shows that long gone are the days when first-time buyers jumped in to a purchase before considering every possible angle. We put your question to financial advisor Liam Ferguson of Ferguson Associates and, according to him, TRS commences from the date you draw down your mortgage, so if you draw down in December, you lose all of 2008 and therefore have only six years TRS at the first-time buyer rates. He suggests that it would be worth while attempting to delay the drawdown until the new year, even it means you miss that psychological deadline of "being in for Christmas". This would seem to be good advice for buyers but more bad news for builders operating at that level of the market and looking at countless empty apartments and houses that are likely to remain so this side of Christmas, despite the good news for borrowers of interest rate falls.
Do we have to pay tax on my son's weekly rent?
Q We have two adult "children" living at home, one a student, the other working. My son who is now working pays rent for his room, €65 a week (a little sporadically). From our point of view, it's not the money, we are more concerned about getting him into the habit of paying his way so that when the time comes for him to move out the shock of paying rent or a mortgage won't be so great. Does this come under the rent-a-room scheme where we get a tax break of €10,000?
There seems to be a little confusion here. The €10,000 isn't a tax break as such, rather homeowners are allowed to rent out a room in their principle private residence and, if the rental income does not exceed €10,000, then the homeowner pays no income tax on that rental income. However, none of this applies to you as, if you are renting a room in your home to your son or daughter, you cannot get tax relief on the rental income. Collecting "rent" from a son or daughter is rarely a commercially thought through enterprise or one which yields a profit. If you considered the costs to you of housing your son it would almost certainly exceed €65 per week, unless you don't allow him to eat at home or turn on the lights, which is probably why many parents in your situation rarely consider such money as "income". If he ever leaves home and you rent out that room to someone unrelated then the scheme might come into play for you - and you probably won't have to do that tenant's laundry!
Your questions
Send your queries to Property questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or e-mail propertyquestions@irish-times.ie. Unfortunately it is not possible to respond to all questions. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
