Your property queries answered.

What tax can we claim on house we rent out?

Our house has been on the market for nearly eight months and, as we have already bought our new house and now moved into it, we have decided to rent out our "old" house for a while and to see what happens in the market. What is the situation with the mortgage interest relief? We would prefer if we got it on our old house as it should be greater.

You don't really have a choice in the matter. Have you informed Revenue about the new changes in your living arrangements? You need to do this as you are no longer entitled to mortgage interest relief at source at the standard rate of tax on your "old" house.

Instead you can claim a tax write-off for the full amount of mortgage interest against your rental income. Mortgage relief will be available on your new residence. Now that you have become a landlord (however reluctantly!) it would be worth consulting a tax advisor to find out what other reliefs you are entitled to.

You should also familiarise yourself with the legal responsibilities and obligations that come with being a landlord. A look at the website of the The Private Residential Tenancies Board (www.prtb.ie) should help in this regard.

I have been landed with an unexpected Revenue bill

Three years ago I was seconded to work in my company's head office (in Germany) and at the time my HR department told me that it would not have any implication on Capital Gains Tax should I come to sell my house at a later date. I sold earlier this year and was alarmed to be told by my solicitor that I will have a tax bill, due at the end of this month.

This was my principal private residence and I was under the impression that there was some leeway when it came to working abroad.

You are right in much of your theory. In general there is no capital gains tax on a property that has been in a continuous principal private residence.

In general, also, if you rent out your home for a time then, when you sell your home, that "time" will incur a capital gains liability.

Some time ago, though, the tax people recognised that people sometimes need to leave their homes for work purposes and that it would be unfair to penalise them in terms of CGT for that.

So, you if you are prevented from occupying your residence because of your employment situation - over a time away that does not exceed four years - then that period of absence will be regarded as occupation.

However the one caveat is that you must live in the residence both before and after the period of absence.

You are still in Germany and did not return to live in your home, and that is why the captial gains tax kicked in.

Send your queries to Property Questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or email 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.