Can I go interest-only to help with costs?
Q I purchased a one-bedroom penthouse apartment in Dublin in 2001. I lived there until I was made redundant and emigrated to the United States in 2004. Since then, I have rented out the property. The rent barely covered the mortgage before interest rates increased. Now I am paying an additional €300 to cover the mortgage, which I cannot afford. I have applied for an interest-only mortgage with the EBS, but it has asked for bank statements and confirmation that I live in the property. Am I liable to pay taxes because I have it rented and do not live in the country?
A Going interest-only on your mortgage is a good idea. By not coming clean with the bank and the authorities when you became a landlord in 2004, however, you have given yourself several problems that need to be sorted. The mortgage rates on investment properties typically are higher and have different terms and conditions than those attached to owner-occupied properties. When you turned your home into an investment property, you should have informed your lender and your insurer as rates are different for rentals. You should inform your lender now of the true situation and take it from there.
It is highly likely it will want to come to an arrangement with you, as it is difficult to see how it would be interested in repossessing a small apartment.
In addition, income from rentals is taxable after certain allowable deductions (see revenue.ie). As it is a self-assessed tax and difficult for the Irish revenue commissioners to chase if the landlord lives abroad, your tenant(s) for the past seven years should have been withholding 20 per cent of the monthly rent from you and paying it to Revenue on your behalf. If they have not done so, and you have not declared your income, then you should rectify this now with Revenue. The longer it goes on, the worse (more expensive) it will get.
As a landlord, you should also be registered with the Private Residential Tenancies Board (prtb.ie). You can do so online and the website should give you all the information you need.
The apartment is not your principal private residence, it is an investment property, which means you should have been paying an additional annual tax of €200 per annum (see nppr.ie). It was introduced on properties that were NPPRs from July 31st, 2009, so you are now in arrears. There’s a lot of paperwork for you to do, but it’s all sortable.
Can we let out our summer home?
Q We have never let out our summer house but are considering doing so this year. There is a strong demand in the area and an ad in the local shop should get tenants. We will only be renting it on an informal basis – no lease etc – do we have to register with the landlord body?
A We assume you mean the Private Residential Tenancies Board (prtb.ie) and the answer is no, holiday lets do not have to be registered. Revenue is increasingly interested in these sorts of arrangements, so make sure you declare the income.
Your questions
Send your queries to Property questions to, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or e-mail propertyquestions@irishtimes.com. This column is a readers’ service and is not intended to replace professional advice.
