Principal Private Residence – Why it matters

What’s your Principal Private Residence?  This has massive tax implications across many areas of tax.  In our experience this causes a lot of confusion.

What is it

According to Paul Young, wherever he lays his hat, that’s his home.  There’s a bit of all of us who like that defination, but unfortunately Irish tax law is a lot more presciptive.

According to Revenue, Your Principal Private Residence can be defined as

“An individual’s principal private residence at any time is the building or part of a building occupied by the individual as his or her only or main residence: during the period of 12 months ending with that time, or where the building was more recently acquired, from the time of acquisition to that time.”

My own individual defination is

“Your Principal Private Residence is the place you live.  If you have two homes, Revenue only allow that you live in one place at any one time, so you have to pick one.”

Income Tax FAQ’s

Q.  My family are in our mortgaged home in Dublin, but I am working in Cork the last 4 years and have rented a place there.  Can I claim Rent Relief?

It is advisable that you retain the home you own in dublin as your Principal Private Residence as it can have implications for your insurance and mortgage.  Also, you can only choose 1 principal private residence. so you will lose your Mortgage Interest Relief if you look to claim Rent Relief.  You will also be required to register your property in dublin as a second property and pay the €200 a year Property Tax for second properties.

Q.  My Son is in college in Limerick.  Can I claim rent relief as I pay for his rent?

Rent Relief is only available for your rent paid on your own principal private residence, so unfortunately you cannot claim Rent Relief for this.

Q.  I have a mortgage with my ex-partner but I have moved out.  I am still claiming mortgage interest relief, is this ok?

If you are not living in your principal private residence, then you cannot claim mortgage interest relief.  But if your ex is still living in the house, then they can continue to claim mortgage interest relief.  Depending on the size of the mortgage, your ex may still receive the same amount of mortgage interest relief as you receive when both of you were claiming.

Claiming mortgage interest relief with your ex may also affect your (and your ex’s) right to claim single parent tax credit – make sure you get this right.

There are also Capital Gains tax implications for your Principal private residence, which we will look at again. 

If you have questions on your taxes, contact us via our website, email refunds@redoaktaxrefunds.ie or call us on 05991 73300